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SAC / HSN for SaaS

Blog Post created by www.withdia.com Your Intelligent Assistant on Sep 6, 2017

In this blog, we look at a query on the code applicable for SaaS (Software as a Service).

 

Query:

What is the HSN / SAC applicable for SaaS services for invoicing?

 

Response:

 

SaaS (Software as a Service) is model that offers a means whereby software may be used by a person without acquiring / purchasing it. Ordinarily, SaaS is understood as a subscription-based model where the software is hosted in the cloud and accessed through the internet. In other words, a SaaS model offers the right to use a software, without acquiring it. Therefore, by virtue of Schedule II of the CGST Act, 2017, the supply would be treated as a supply of services. The relevant entries would fall under the head Licensing services for the right to use intellectual property and similar products, attracting tax at 18%. The 6-digit code may be determined based on the description provided in the scheme of classification of services. 

 

The two most relevant entries are reproduced below:

997331Licensing services for the right to use computer software and databases;
997339Licensing services for the right to use other intellectual property products and other resources nowhere else classified

 

Legislative reference: Schedule II to the CGST Act, 2017 read with the scheme of classification of services provided as an Annexure to Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. 

 

Authors: Meghana Belawadi and NR Badrinath

 

  

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