The SAC code for software development services is 998314, and the general GST rate is 18% in India. This code covers information technology design and development services, including custom software, website development, application development, database design and software integration.
Software development services are classified under SAC (Services Accounting Code), not HSN, because they involve providing services rather than supplying goods.
What Is the SAC Code for Software Development Services?
Software development services fall under SAC 998314 – Information Technology (IT) Design and Development Services.
This classification covers businesses and professionals who design, develop, customise or integrate software solutions for clients.
| Particular | Details |
|---|---|
| Service | Software development services |
| SAC code | 998314 |
| Official description | Information technology design and development services |
| SAC group | 99831 |
| SAC heading | 9983 |
| General GST rate | 18% |
| CGST + SGST | 9% + 9% |
| IGST | 18% |
The classification applies to qualifying development services provided by software companies, IT agencies and independent developers.
Services Covered Under SAC 998314
SAC 998314 covers different types of software design, development and implementation work.
| Software development service | Examples | SAC code | General GST rate |
|---|---|---|---|
| Custom software development | Building software according to a client’s business requirements | 998314 | 18% |
| Website development | Designing and developing websites or web applications | 998314 | 18% |
| Mobile application development | Developing Android, iOS or cross-platform applications | 998314 | 18% |
| Database development | Designing database structures and related applications | 998314 | 18% |
| Software customisation | Modifying an existing application for a client’s requirements | 998314 | 18% |
| Software integration | Integrating applications, databases or business systems | 998314 | 18% |
| IT solution design | Designing custom software systems and technical solutions | 998314 | 18% |
These services fall under SAC 998314 when the primary activity is IT design, development or qualifying customisation.
GST Rate on Software Development Services in India
Software development services classified under SAC 998314 generally attract 18% GST.
For intra-state transactions, the applicable tax is divided into:
- 9% CGST
- 9% SGST
For inter-state transactions, 18% IGST generally applies.
However, the GST treatment can differ for qualifying exports of services, supplies to Special Economic Zones (SEZs) and other transactions covered by specific GST provisions.
GST on Custom Software Development
Custom software development generally falls under SAC 998314.
For example, if a software company develops an inventory management application specifically for a retailer, the development service would ordinarily be classified under this code.
The general GST rate is 18% for a taxable domestic supply.
GST on Website and Mobile App Development
Website and mobile application development also fall under SAC 998314 when the engagement involves designing or developing a software application.
This includes developing custom websites, mobile apps and web-based business systems.
The general GST rate is 18% for taxable domestic services.
GST on Software Customisation and Integration
Customising existing software or integrating applications with a client’s systems can also fall under SAC 998314.
For example, modifying an existing business application to work with a client’s database may qualify as an IT design and development service.
However, routine technical support or maintenance without development work may require a different classification.
GST Calculation Example for Software Development Services
Suppose a software development company charges ₹1,00,000 for building a custom business application for an Indian client.
| Particular | Amount |
|---|---|
| Software development charges | ₹1,00,000 |
| GST at 18% | ₹18,000 |
| Total invoice value | ₹1,18,000 |
For an intra-state transaction, the GST consists of ₹9,000 CGST and ₹9,000 SGST.
For an inter-state transaction, ₹18,000 IGST generally applies, subject to the place-of-supply provisions.
This calculation assumes a taxable domestic software development service.
Difference Between Software Development and Other IT Services
Not every software-related activity falls under SAC 998314.
The correct classification depends on the actual nature of the service.
| IT service | SAC code | Classification |
|---|---|---|
| Custom software and application development | 998314 | IT design and development services |
| IT consulting and technical support | 998313 | IT consulting and support services |
| Hosting and IT infrastructure provisioning | 998315 | Hosting and IT infrastructure provisioning services |
| IT infrastructure and network management | 998316 | IT infrastructure and network management services |
| Licensing the right to use computer software and databases | 997331 | Intellectual property licensing services |
For example, developing a new application generally falls under SAC 998314.
However, providing technical support for an existing application may fall under SAC 998313.
Similarly, granting software usage rights without performing development work may require classification under the relevant licensing provisions.
Is GST Applicable on Software Development Services Exported from India?
Software development services supplied to overseas clients may qualify as exports of services under GST when all statutory conditions are satisfied.
Qualifying exports are zero-rated supplies under the IGST Act.
A registered exporter may generally supply eligible services under a Letter of Undertaking (LUT) without payment of integrated tax, subject to the applicable rules.
However, receiving payment from a foreign client does not automatically make the transaction an export of services.
The supplier must satisfy the applicable conditions, including the location of the recipient, place of supply and other requirements under the IGST Act.
How to Identify the Correct SAC Code for Software Services
Businesses should identify the primary service provided to the client before selecting a SAC code.
If the engagement involves designing, coding, developing, customising or integrating a software application, SAC 998314 generally applies.
If the work mainly involves IT consulting, troubleshooting, hosting, network management or licensing, a different SAC may be appropriate.
The service agreement, statement of work and invoice description should accurately reflect the nature of the supply.
Businesses can verify the classification using the official GST Portal’s HSN/SAC search facility.
Frequently Asked Questions
What is the SAC code for software development services?
The SAC code for software development services is 998314. It covers IT design and development services, including custom applications, websites, databases and software integration.
What is the GST rate on software development services?
Software development services under SAC 998314 generally attract 18% GST in India for taxable domestic supplies.
What is the SAC code for website development?
Website development generally falls under SAC 998314 when the service involves designing, coding or developing a website or web application.
Is GST charged on software development services provided to foreign clients?
Qualifying exports of software development services are zero-rated under GST. However, all applicable export-of-services conditions must be satisfied before treating a transaction as zero-rated.
Official Sources
- GST Council – Scheme of Classification of Services
- GST Council – Explanatory Notes to the Scheme of Classification of Services
- CBIC – GST Rates for Goods and Services
- CBIC – Integrated Goods and Services Tax Act, 2017
- GST Portal – Search HSN/SAC Code
Last Reviewed: 22 October 2026
