SAC Code for Passenger Transport, Travel & Tour Operator Services: Your Complete GST Guide

If you run a transport, travel, or tour business in India, you know that GST compliance is non-negotiable. But one of the most confusing aspects can be identifying the correct Services Accounting Code, or SAC code, for your services. This guide simplifies the process by providing a clear breakdown of the SAC code passenger transport, travel agencies, and tour operator services. Using the right code is crucial for accurate GST invoicing, filing returns, and claiming Input Tax Credit (ITC). Getting it wrong can lead to notices and penalties, disrupting your business operations. We will cover the specific SAC codes, their corresponding GST rates, and how to apply them correctly to keep your business compliant and running smoothly.

What is an SAC Code and Why Does it Matter for Your Business?

Before diving into the specific codes for transport and travel, it’s essential to understand the foundation of the Services Accounting Code (SAC) system. Think of it as the GST equivalent of an address for every service you provide. Just as an address ensures a letter reaches the right destination, an SAC code ensures your service is correctly identified, taxed, and reported within the GST framework. Its proper use is not just a regulatory formality but a critical component of sound financial management for your business.

Understanding the SAC Code Framework

The SAC is a standardized classification system used in India to identify and categorize all services under the Goods and Services Tax (GST) regime. It was developed by the Service Tax department and has been adopted into the GST framework to bring uniformity to service taxation.

Structure: Every SAC code is a unique 6-digit number. This structure is not random; it’s hierarchical.
- The first two digits (e.g., 99) represent the major service sector, which is consistent for all services.
- The next two digits (e.g., 64) represent the major nature of the service within that sector, like ‘Passenger Transport Services’.
- The final two digits (e.g., 11) describe the specific, detailed nature of the service, such as ‘Local transport services of passengers by metered cabs’.

This system is similar to the HSN (Harmonized System of Nomenclature) code used for classifying goods, creating a parallel structure for both goods and services under GST.

The Critical Role of SAC in GST Compliance

The importance of using the correct SAC code cannot be overstated. It is the backbone of your GST compliance activities and directly impacts your tax liability.

Determines GST Rate: The primary function of an SAC code is to determine the correct GST rate applicable to your service. A slight mistake in choosing the code can lead to applying an incorrect tax rate, resulting in either underpayment or overpayment of taxes.
Mandatory for Invoicing: Under GST law, it is mandatory to mention the correct SAC code on all tax invoices you issue to your customers. An invoice without a valid SAC code is considered non-compliant and can be rejected by your clients for claiming ITC.
Essential for GST Returns: When you file your monthly or quarterly GST returns, such as GSTR-1 and GSTR-3B, you are required to provide a summary of your services based on their SAC codes. Correct SAC classification for transport services ensures that your returns are accurate and helps the government track service-based transactions across the economy with greater transparency.

How Accurate SAC Codes Impact Your Input Tax Credit (ITC)

Input Tax Credit (ITC) is the heart of the GST system, allowing you to deduct the tax you’ve already paid on inputs (goods and services) from the tax you collect on your outputs. Proper SAC classification is essential for correctly calculating and claiming ITC. When you correctly classify your output services, you can accurately map them to the input services and goods used to provide them. This ensures that you claim the rightful amount of ITC, which directly improves your business’s cash flow and reduces your overall tax burden. Any mismatch in SAC codes during audits can lead to the disallowance of ITC claims and demands for interest and penalties.

Decoding the SAC Code for Passenger Transport Services

This section focuses on the primary topic: the correct SAC code passenger transport. All services related to the transportation of people, whether within a city or across the country, fall under a single main heading. The main heading for all passenger transport services is 9964. Understanding the sub-categories within this heading is key to pinpointing the exact code for your specific business activity. Finding the right passenger transport SAC code in India begins with determining the nature and distance of the transport you provide.

Heading 9964: A Detailed Breakdown

Heading 9964 is the umbrella category that covers ‘Passenger Transport Services’. It is further divided based on the mode of transport (road, rail, air, water) and the distance (local or long-distance). Every business involved in moving people from one place to another will find its relevant code within this series. Whether you operate a single taxi or a fleet of inter-state buses, your compliance journey starts by identifying the right code under this heading.

Local Passenger Transport Services (SAC 99641)

This group covers transportation that typically occurs within the same city or a metropolitan region. These are short-distance services that people use for their daily commute or local travel needs.

SAC 996411: This code is for local transport of passengers by metered cabs, auto-rickshaws, and radio taxis. This is the primary code for services like Ola, Uber, and other local taxi operators.
- GST Rate: 5% (with no Input Tax Credit available to the service provider).
SAC 996412: This code applies to local bus services, including stage carriages. This covers city buses operated by government authorities or private players.
- GST Rate: Transport by non-air-conditioned stage carriage is exempt from GST. For AC buses, the rate may vary.
SAC 996413: This code is for local rail transport, such as the metro, monorail, and suburban railway services.
- GST Rate: Travel by metro is exempt from GST. Travel by first-class or in an air-conditioned coach in local trains is taxed at 5% (with ITC on input services).

Long-Distance Passenger Transport Services (SAC 99642)

This group is for transport services SAC code India that operate between different cities or states. These are typically used for tourism, business travel, or visiting family in other parts of the country.

SAC 996421: This is the code for long-distance rail transport. This includes all passenger trains operated by Indian Railways. The GST rate depends on the class of travel.
- GST Rate: Travel in any class other than first class or an air-conditioned coach is exempt. For first-class or AC coaches, the GST rate is 5% (with ITC on input services).
SAC 996422: This code covers long-distance bus/road transport. It applies to inter-state buses, charter buses, and other contract carriages used for long journeys.
- GST Rate:
  - Transport by a non-air-conditioned contract carriage is taxed at 5% (with no ITC).
  - Transport by an air-conditioned contract carriage is taxed at 12% (with full ITC).

Finding the Right SAC Code for Travel and Tour Operator Services

While passenger transport providers are directly involved in moving people, travel agencies and tour operators provide a different set of services. They act as intermediaries or organizers, bundling various services like transport, accommodation, and sightseeing into convenient packages. Consequently, their activities fall under a different SAC heading. The SAC code travel services India is distinct from the codes used for direct transport.

Main SAC Heading 9985: Support Services for Travel and Tours

Services like ticket booking, tour planning, and holiday package management are classified under Heading 9985, which covers a broad range of ‘Business Support Services’. This distinction is crucial because using a transport code (9964) for a tour package service would be incorrect and lead to compliance issues. Businesses that facilitate travel without operating the vehicles themselves must look within this category to find their correct code.

Key SAC Codes for Travel Agencies & Tour Operators

This is where most travel and tourism businesses will find their relevant classification. The SAC code for travel and tour operators is highly specific to the nature of the service offered.

SAC 998551: Travel agency and tour operator services.
- This is the primary SAC code for travel agencies India and the main SAC code tour operator services India.
- Scope: This code covers a wide range of activities, including:
  - Arranging and organizing tour packages.
  - Booking accommodation in hotels, resorts, etc.
  - Booking tickets for transport (air, rail, road).
  - Providing travel documentation assistance.
- GST Rate: The standard GST rate for these services is 18%.
SAC 998552: Tourist guide services.
- Scope: This code is specifically for individuals or companies that provide standalone tourist guide services. If a guide service is part of a larger tour package, it would be covered under 998551.
- GST Rate: This service is typically taxed at 18%.

Special GST Rules for Tour Operators

The government has recognized the unique nature of the tour operator business, where the total cost of a package includes various components (flights, hotels, transport) on which GST has already been paid. To avoid double taxation and simplify compliance, a special valuation rule is available for tour operators.

Under this rule, a tour operator can choose to pay GST at a concessional rate of 5% on the total package cost, but with the condition that they cannot claim any Input Tax Credit (ITC) on the goods and services used to create the package. This is an optional scheme and is often beneficial for operators dealing in B2C packages. This is a critical compliance point for any business using the travel operator SAC code India and can significantly impact profitability.

How to Use SAC Codes Correctly on Your GST Invoices

Knowing the right SAC code is only half the battle; applying it correctly on your invoices is what ensures compliance. An accurate and complete invoice is a legal document that serves as proof of a transaction for both you and your client.

A Simple Step-by-Step Guide

Follow these four simple steps to ensure your invoices are always GST-compliant:

Identify Your Service: First, clearly determine the primary nature of the service you have provided. Are you providing a single cab ride (passenger transport) or a complete holiday package (tour operator service)? This initial step is crucial for selecting the right SAC heading.
Find the Exact SAC Code: Refer to the sections above or the official CBIC guidelines to find the specific 6-digit SAC code for passenger transport services or travel services you offer. For instance, for a local cab service, use 996411, not just 9964.
Mention on Invoice: Your GST-compliant invoice format must have a dedicated column for the SAC code. Clearly state the correct 6-digit code for each service listed on the invoice.
Apply Correct GST Rate: Once the SAC code is identified, apply the corresponding GST rate. Remember to charge CGST + SGST for intra-state (within the same state) transactions and IGST for inter-state (between different states) transactions.

Common Mistakes to Avoid

Even with the best intentions, businesses can make errors. Here are a few common mistakes to watch out for:

Using a Generic Code: Avoid using a 4-digit heading code like 9985 when a more specific 6-digit code like 998551 is available. Specificity is key to compliance.
Forgetting to List the SAC Code: Omitting the SAC code from an invoice is a direct violation of GST rules. This can lead to the invoice being considered invalid for ITC purposes by your clients.
Applying the Wrong GST Rate: This is a serious error that can lead to significant financial repercussions. Always double-check that the GST rate you apply matches the SAC code you have mentioned. Mismatches are a major red flag during GST audits.

Conclusion

Correctly identifying the SAC code for passenger transport and travel services is not just a procedural requirement; it is a fundamental part of robust GST compliance. As we’ve covered, services directly involving transport fall under Heading 9964, while ancillary services provided by travel agencies and tour operators are classified under Heading 9985. Using the right codes and their corresponding GST rates ensures that your invoices are accurate, your tax payments are correct, and your Input Tax Credit claims are smooth and undisputed. This proactive approach to compliance keeps you safe from potential notices, interest, and penalties, allowing you to focus on what you do best—serving your customers.

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Frequently Asked Questions (FAQs)

1. What is the SAC code for Ola/Uber or other taxi services?

The SAC code for local transport services provided by metered cabs or radio taxis, including aggregators like Ola and Uber, is 996411. The service is subject to 5% GST, and the service provider is not eligible to claim Input Tax Credit (ITC) on it.

2. I arrange tour packages that include transport, hotels, and guide services. Which SAC code should I use?

As a tour operator providing a bundled service, you should use SAC 998551 for ‘Tour operator services’. This single code covers the entire package, including all its components like transport, accommodation, meals, and sightseeing. You should not use separate SAC codes for each component.

3. Where can I find the official and complete list of SAC codes?

The official and most current list of SAC codes is maintained by the Central Board of Indirect Taxes and Customs (CBIC). You can refer to the resources available on the official GST Council website for the complete and updated list. For detailed notifications and circulars, the CBIC-GST portal is the authoritative source.

4. Is the GST rate the same for all passenger transport services?

No, the GST rate is not uniform across all passenger transport services. It varies significantly based on factors like the mode of transport (road, rail), whether the service is air-conditioned or non-air-conditioned, and the class of travel. For example, transport by a non-AC contract carriage is taxed at 5% (with no ITC), while an AC contract carriage is taxed at 12% (with ITC). It is crucial to check the specific rate for your particular service to ensure accurate tax collection.

SAC Code Passenger Transport: What You Need to Know!