GST on Software & IT Services — Rates, SAC Codes & Invoice Guide
Software and IT services attract 18% GST in India. Whether you build custom software, sell SaaS subscriptions, or provide IT consulting, the GST treatment follows the same rule — but exports are zero-rated, giving Indian software exporters a significant advantage.
By Arjun Sharma· GST & Tax Compliance Specialist···Reviewed for GST accuracy
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GST Rate on Software Services
All software-related services attract 18% GST. This includes custom software development, SaaS (Software as a Service), website development, mobile app development, IT consulting, cloud hosting, and software maintenance contracts. The SAC code is 998314 for software development and production services, and 998313 for IT consulting and support. If your company develops and sells packaged software (on a CD or download), that is treated as goods and carries HSN 8523 at 18% GST. The key distinction is between a software service (ongoing subscription or custom work) and a packaged software product (one-time sale of a licence).
Service Type
SAC Code
GST Rate
Custom software development
998314
18%
SaaS / cloud software subscription
998314
18%
IT consulting & support
998313
18%
Website & app development
998314
18%
Software exports (LUT route)
998314
0% (zero-rated)
Packaged software (goods)
HSN 8523
18%
Software Exports Are Zero-Rated
Indian software companies exporting services to foreign clients pay zero GST on those exports — making India's IT export industry extremely competitive. To export without IGST, file a Letter of Undertaking (LUT) on the GST portal before raising export invoices. The export invoice must state "Supply meant for export under LUT without payment of integrated tax." You can then claim a refund of accumulated ITC on inputs (office rent, computers, software tools). For companies with both domestic and export clients, ITC must be apportioned between taxable domestic supply and zero-rated export supply.
Example
A Bengaluru software company invoices a US client USD 10,000 for custom development (approx. ₹8,30,000 at RBI rate). IGST: Nil (under LUT). The company claims ITC refund on ₹2,40,000 worth of input costs (AWS, Jira, developer laptops). Monthly GST liability for domestic clients at 18%: invoiced separately.
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18% GST (SAC 998314) on all custom software development, SaaS, and IT services provided to Indian clients. Exports to foreign clients are zero-rated.
Is GST applicable on SaaS subscriptions?
Yes. SaaS subscriptions are treated as services (SAC 998314) and attract 18% GST when sold to Indian customers. For foreign customers, the subscription is an export of service — zero-rated if the company files an LUT.
What SAC code do IT companies use?
SAC 998314 for software development and production. SAC 998313 for IT consulting, helpdesk, and managed services. Both at 18% GST.
Can IT companies claim ITC on laptops and software tools?
Yes. Computers, laptops, software subscriptions (Adobe, GitHub, AWS), office furniture, and internet connections are all eligible for ITC if used for providing taxable IT services.
Why Businesses Stop Using Excel for GST Invoices
Manual GST calculation mistakes
One wrong CGST/SGST split or a misapplied rate triggers notices and ITC denial for your buyer.
Slow invoice creation
Copying last month's Excel file, updating dates, recalculating — 20 minutes for what should take 30 seconds.
Formatting breaks on every device
Excel invoices look different on every printer and PDF converter. Clients complain about unreadable layouts.
No easy sharing or payment link
Sending PDFs over WhatsApp with no way for clients to pay directly slows down collections.
Incorrect tax type (IGST vs CGST+SGST)
Excel can't auto-detect intra vs inter-state supply. Wrong tax type = ITC rejected for your buyer.
Disclaimer: The information in this article is for general informational purposes only and does not constitute professional tax, legal, or financial advice. GST rules and rates are subject to change. Consult a qualified CA or tax professional before making compliance decisions.
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