If you supply both products and services, you will run into two classification systems under GST: HSN and SAC. They do the same job — decide the GST rate and standardise what you’re selling — but one is for goods and the other for services.
HSN and SAC in one line
- HSN (Harmonized System of Nomenclature) → classifies goods.
- SAC (Services Accounting Code) → classifies services.
Both must appear on GST invoices (subject to turnover rules), and both map your supply to a GST rate. The difference is simply what they classify.
Where they come from
HSN is an internationally standardised system developed by the World Customs Organization, used by most countries to classify traded goods. India adopted it for excise and customs long before GST.
SAC is India’s own system for classifying services under GST, built on the UN Central Product Classification framework. Every SAC begins with 99, which marks it as a service.
Structure compared
| HSN (goods) | SAC (services) | |
|---|---|---|
| Starts with | Chapter 01–98 | 99 |
| Length | 2 / 4 / 6 / 8 digits | 6 digits |
| Example | 6109 (T-shirts) | 998314 (IT design & development) |
| Breakdown | Chapter → Heading → Sub-heading → Tariff item | 99 → Chapter group → Service code |
For SAC, a code like 998314 reads as: 99 (services) → 83 (professional/technical services group) → 14 (IT design and development).
When each is mandatory
The digit-quoting rules are the same for both, based on aggregate turnover:
- Up to ₹5 crore → at least 4 digits on B2B invoices (optional on B2C)
- Above ₹5 crore → 6 digits on all invoices
So a consultant below ₹5 crore quotes at least the 4-digit SAC group; above ₹5 crore they quote the full 6-digit SAC.
What if you supply both goods and services?
Many businesses do — for example a firm that sells equipment (goods) and also provides installation (service). On a single invoice you may have:
- Goods lines with HSN codes
- Service lines with SAC codes
Each line carries its own correct code and rate. Where goods and services are naturally bundled as a single supply (a composite supply), classification follows the principal supply — but distinct items should carry their own codes.
Finding the right code
- Decide first: is this line goods or a service? That tells you HSN vs SAC.
- Search by description in a reliable HSN & SAC code finder.
- Match the description carefully — pick the closest, not just the first hit.
- Confirm the GST rate attached to the code.
- Use the code consistently across invoices for the same item.
A quick example
An IT firm invoices a client for a laptop and for software development:
- Laptop → HSN 8471 (goods), taxed at its applicable rate
- Software development → SAC 998314 (service), taxed at 18%
Two lines, two systems, one invoice — each with the correct code.
The bottom line
HSN classifies goods; SAC classifies services (and always starts with 99). Both drive the GST rate, both must be quoted per the turnover-based digit rules, and if you supply both, each invoice line gets the appropriate code. Get the goods-vs-service call right first — the rest follows.
Look up the correct HSN or SAC code for anything you sell with the free HSN & SAC code finder.