HSN and SAC Codes for Services in India — Complete Guide for Freelancers

If you have registered for GST or are preparing your first tax invoice, you have likely run into the requirement for HSN or SAC codes. While they sound technical, getting these codes right is essential to avoid tax disputes. Understanding the correct HSN code for freelancers India is required under tax laws.

In this guide, we will explain the difference between HSN and SAC, list the most common codes for digital service providers, and show you how to apply them to your invoices in Khatago.

HSN vs. SAC: What's the Difference?

  • HSN (Harmonized System of Nomenclature): A globally accepted product classification code used to categorize tangible goods.
  • SAC (Service Accounting Code): A specialized classification system introduced by the Central Board of Indirect Taxes and Customs (CBIC) in India to identify and categorize services under the GST regime.

    • Since most freelancers, developers, agencies, and consultants supply services rather than physical goods, you will almost exclusively use SAC codes on your tax bills. However, in conversation and on most billing portals (including Khatago), the field is often written as "HSN/SAC Code".

    Why are HSN/SAC Codes Mandatory?

    Including these codes is a legal requirement under GST rule book:

  • It standardizes tax rates for specific services across India.
  • It is required on GSTR-1 returns under Table 12.
  • It allows your corporate clients to verify the transaction details and process input tax credits.

    • Standard HSN/SAC Codes for Freelancers & Agencies

    Here is a list of the most common SAC codes used by service providers in India:

    1. Software Development & IT Services

  • SAC 998313 — Information Technology Services: General IT consulting, software support, database setup, and system integration.
  • SAC 998314 — Software Design & Web Development: Creating websites, custom apps, coding services, frontend development, and custom UI design.
  • SAC 998315 — Hosting & Cloud Infrastructure Services: Server setup, website hosting, SaaS hosting, and domain management.

    • 2. Marketing, Advertising & Content Creation

  • SAC 998361 — Advertising Services: Digital ad management, pay-per-click setups, media planning, and ad campaigns.
  • SAC 998397 — Marketing Research & Consulting: Brand strategists, market research, SEO audits, and marketing advice.
  • SAC 998391 — Content Writing & Creative Writing: Copywriting, article drafting, technical documentation, and scripting.

    • 3. Design & Creative Services

  • SAC 998381 — Graphic Design & Illustration: Logo design, brand styling, social media graphic creation, and illustrations.
  • SAC 998383 — Photographic & Videography Services: Commercial photography, video editing, event shoots, and drone footage.

    • 4. Consulting & Professional Services

  • SAC 998311 — Management Consulting: Business strategy, management services, process engineering, and agency consulting.
  • SAC 998240 — Legal & Accounting Services: Bookkeeping, compliance consulting, tax preparation, and corporate legal work.

    • How to Set HSN/SAC Codes in Khatago

    Khatago makes it simple to manage SAC codes:

  • In the invoice editor, go to line items.
  • In the "HSN/SAC" field, type the appropriate 6-digit code (e.g. `998314` for web design).
  • If you use our Inventory feature, you can assign the SAC code to your item once. Every time you add that item to a bill, the code will auto-fill instantly.

    • GST invoice format for freelancers

    How Many Digits Do You Need?

    Under GST rules, the number of digits you need to report depends on your annual turnover:

  • Turnover up to ₹5 Crores: You need to report at least a 4-digit code.
  • Turnover above ₹5 Crores: You must report a 6-digit or 8-digit code.

    • For freelancers, we always recommend using the full 6-digit SAC code as it makes invoice matching simpler and prevents discrepancies on client portals.