GST on Research and Development Services Under SAC Code 9981

Bio

Shreyansh Singh, an IIT Kanpur alumnus, has eight years of experience in the finance industry. He has spent 5 years at American Express developing mid to long-term strategies for multiple markets including US, Europe and India. Shreyansh currently leads Growth and Strategy initiatives at Pice.

  • 13 Aug 25
  • 7 mins
gst on research and development services

GST on Research and Development Services Under SAC Code 9981

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avatar of shreyansh singh Shreyansh Singh
  • 08 Mins
  • 13-08-25

Key Takeaways

  • HSN SAC Code 99814 under GST applies to research and development services in science, technology, and humanities.
  • Businesses with turnover above ₹5 crore must use SAC 998141 for GST compliance in R&D services.
  • The standard GST rate for R&D services under SAC 99814 is 18% unless exempted.
  • Correct GST SAC code classification ensures proper invoicing, refunds, and audit readiness.
  • Research and development GST compliance requires accurate SAC usage based on turnover and registration.

In India’s GST system, research and development original services go under HSN SAC code 99814. This category covers a broad spectrum of R&D activities, including projects in cutting-edge technologies, foreign technology, technology imports, the social sciences, the humanities and the natural sciences.

The SAC (Services Accounting Code) system supports compliance, promotes openness and enables organised record-keeping to ensure correct tax classification.

In this article, we will discuss the HSN SAC Code for GST on research and development services in India.

What Is the HSN SAC Code for Research & Development Originals 99814?

What Is the HSN SAC Code for Research & Development Originals 99814?

The Services Accounting Code (SAC) system, which is used in India to categorise services under the GST on research and development services, includes the HSN SAC code 99814. All Research and Development (R&D) originals are marked with SAC code 99814.

In foreign technology, the social sciences, the humanities and the natural sciences, the term covers original research and experimental development.

Research in code involves work on basic and applied research as well as the creation of sample products to solve particular concerns. This classification provides the desirable clarity and comfort to business owners and experts involved in the research and development (R&D) sector.

The SAC under R&D is by and large chargeable to GST at 18%, except for exempted items. R&D companies need to apply this SAC correctly while filing GST services, claiming refunds, or sending invoices for payments to abide by the Indian tax framework and simplify the audit.

Who Needs to Get an HSN SAC Code for Research & Development Originals?

Notification Number 78/2020, CT(R), dated November 10, 2020, prescribes certain invoice requirements for service providers engaged in R&D under SAC Code 998141 depending on their turnover and the nature of their business.

  • Registered suppliers whose turnover from all sources exceeds Rs. 5 crore in the previous year should issue invoices to the customers and file GSTR-1 using the 6-digit SAC code (998141) as per provisions on research and development services under GST.
  • Registered B2B suppliers whose turnover does not exceed Rs. 5 crore in the year will issue invoices with the 4-digit SAC code (9981). It is optional for composition dealers and other B2C supplies to use the 4-digit SAC code.
  • No SAC code is required for unregistered supplies.

Hence, from the 1st of April, 2021, all those who are providing taxable R&D services falling under SAC 998141 and are within the GST ambit have to recognise the correct format of the SAC code either based on turnover or registration status to maintain compliance.

Importance of HSN SAC Code Under GST Compliance

Importance of HSN SAC Code Under GST Compliance

The Services Accounting Code (SAC) and the Harmonised System of Nomenclature (HSN) Code are essential classification systems for GST on research and development services. Here are the reasons why it is so:

  1. Compliance with GST

The foundation of GST compliance is made up of SAC and HSN codes for services. They assist companies in accurately classifying their products and services so they can adhere to the GST framework and stay out of trouble.

  1. Precise Tax Rate Calculation

This code for services helps determine which GST rate is appropriate for each supply. This guarantees that companies charge and pay the appropriate tax, preventing problems with underpayment or overpayment.

  1. GST Registration

Businesses must disclose their SAC and HSN codes when registering for GST. Accurate classification supports proper registration and compliance, helping define the nature and operations of the company.

  1. GST Invoice Generation

The appropriate SAC or HSN codes must be included on invoices. This criterion guarantees transparency between buyers and sellers and renders the invoice legally valid under GST.

  1. Standardised Categorisation

By offering a standardised and internationally recognised method for categorising products and services, SAC and HSN help to eliminate uncertainty in stakeholder communications.

  1. Promotes International Trade

HSN codes are in line with international customs standards, which facilitate cross-border business transactions and cut down on delays associated with trade.

  1. Effective Audit and Record-Keeping

Proper coding enables accurate record maintenance, which is crucial for both compliance and audits.

Key Features of HSN SAC Code for Research & Development Originals

Under GST on research and development services, a structured SAC (Services Accounting Code) is followed. The main points are as follows:

  • All service-related SAC codes start with the number "99," indicating that the entry pertains to services rather than products.
  • Authorities further categorise these numbers according to the type of service and its attributes.
  • The codes aid in pinpointing the precise type of service and the corresponding tax obligation.
  • The service provider's yearly turnover determines the length of SAC code usage, which impacts the requirements for invoices and GST returns.

GST Rate Associated with HSN SAC Code

GST Rate Associated with HSN SAC Code

Under CBIC (Central Board of Indirect Taxes and Customs) guidelines, authorities use the following GST slab rates to tax services classified under HSN SAC codes:

  • 0%
  • 5%
  • 12%
  • 18%
  • 28%

Conclusion

For GST on research and development services, the HSN SAC code 99814 is necessary. This allows businesses to meet rules, use the correct taxes and get their return and invoice filing done promptly. By adopting the right SAC code format for their turnover and registration, the landscape for businesses can be clear for all.

This code enables authorities to appropriately recognise R&D services like technology imports, rental services, and market research services within the larger taxation system, streamline audit procedures and improve record-keeping with an applicable GST rate of 18% (unless exempted).

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FAQs

What is HSN SAC Code 99814 in GST for research and development services?

HSN SAC Code 99814 is used under GST to classify research and development services in areas like natural sciences, social sciences, humanities, and technology. It helps businesses ensure GST compliance by correctly categorising services for invoicing and filing returns. Using the right SAC code avoids tax disputes, enables smooth refund claims, and supports accurate GST rate application for R&D activities.

What is the GST rate for services under HSN SAC Code 99814?

The standard GST rate for R&D services under HSN SAC Code 99814 is 18%, unless specifically exempted by GST notifications. This rate applies to both domestic and international research services. Correct GST classification ensures businesses apply the right tax rate, claim eligible ITC, and remain compliant with Indian GST laws for research and development services.

Who should use the 6-digit SAC 998141 instead of the 4-digit SAC 9981?

Under GST rules, service providers with turnover above ₹5 crore in the previous financial year must use the 6-digit SAC code 998141 for R&D services. B2B suppliers with turnover up to ₹5 crore can use the 4-digit SAC code 9981. Accurate SAC usage helps in R&D GST compliance, proper invoicing, and smoother filing of GST returns for research and development services.

Why is the correct SAC code important for GST on research and development services?

Using the correct HSN SAC code for R&D ensures businesses meet GST compliance requirements, apply the correct GST rate, and issue legally valid invoices. It also supports audit readiness, helps claim GST refunds without delays, and standardises service classification for domestic and international trade. This is essential for companies engaged in research and development GST filing.

Does HSN SAC Code 99814 cover foreign technology and international R&D projects?

Yes, HSN SAC Code 99814 includes both domestic and foreign research and development services, covering technology imports and international R&D collaborations. Whether the research work is done in India or involves overseas partners, it falls under this SAC for GST purposes. This ensures uniform GST treatment for cross-border R&D, technology imports, and innovation projects.
About the author
Shreyansh Singh

Shreyansh Singh

Shreyansh Singh, an IIT Kanpur alumnus, has eight years of experience in the finance industry. He has spent 5 years at American Express developing mid to long-term strategies for multiple markets including US, Europe and India. Shreyansh currently leads Growth and Strategy initiatives at Pice.

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