What is a SAC code?
SAC, the Services Accounting Code, is the classification framework used on Indian GST invoices to identify services being supplied. While HSN codes classify goods, SAC codes classify services. Together they cover the full universe of GST-eligible supplies. For solar businesses, SAC codes appear on invoices for installation, design, commissioning, annual maintenance, and consulting services.
SAC codes are organised in a hierarchical structure similar to HSN. The structure starts with broad chapters and extends through 6-digit specific subcodes. Solar installation services typically fall under SAC chapter 9954 (construction-related services) or 9987 (maintenance and installation services), with specific 6-digit codes for solar PV system installation. The exact applicable SAC and GST rate is published in CBIC notifications.
Correct SAC coding is mandatory above turnover thresholds. Businesses above ₹5 crore aggregate annual turnover must use full 6-digit SAC; smaller businesses use 4-digit. Wrong SAC can lead to wrong GST rate, ITC issues, and audit problems.
Why SAC codes matter
For solar EPCs, every services component of an invoice needs the correct SAC. EPC services are typically structured as composite supplies bundling goods and services; SAC identifies the service component and its applicable GST rate.
For customers, the SAC determines whether and how they can claim ITC on the service portion of their solar invoice. Commercial customers with GST registration claim ITC; residential customers cannot.
For accountants, SAC reconciliation is part of monthly GST returns. The supplier-side SAC must match the customer-side claim for clean reconciliation.
For audit defence, clean SAC documentation is the protection against rate-mismatch challenges from tax authorities.
How SAC coding works on a solar service invoice
- Service identification. Each service component on the invoice is identified (installation, commissioning, AMC, etc.).
- SAC assignment. Each service maps to a SAC code from the CBIC services schedule.
- Rate lookup. Each SAC has a notified GST rate.
- Invoice line item. SAC code, description, rate, and amount on each service line.
- Composite supply handling. Where goods and services are bundled, principal supply rule determines the dominant tax treatment.
- Customer ITC. Customer files ITC claim referencing the SAC for service-component tax.
- Reconciliation. Supplier and customer side returns match through SAC.
Real example: SAC on a 25 kWp commercial rooftop EPC contract
Contract structure. Composite supply contract for design, supply, installation, and 1-year AMC of a 25 kWp solar system.
Invoice components. Modules (HSN 8541), inverter (HSN 8504), mounting (HSN 7610), cables (HSN 8544). Installation and commissioning (SAC under 9987 or 9954, specific 6-digit code). AMC for 1 year (SAC under 9987).
Treatment. Composite supply with the principal supply (solar system installation) determining the dominant treatment. The relevant SAC and rate apply to the bundled supply.
GST rate. Approximately 12 percent on the bundled supply (verify current notification).
Customer side. Commercial customer claims ITC on the full invoice subject to eligibility rules.
Benefits of correct SAC coding
- Correct GST rate. No over- or under-payment.
- Clean ITC for customer. Supplier-side SAC supports customer's claim.
- Audit defence. Documentation trail for service classification.
- Reconciliation efficiency. Cross-side filings match.
- Composite supply clarity. Proper treatment of bundled goods + services.
- Compliance simplicity. Reduces friction with tax authorities.
Limitations and challenges
Composite supply complexity. Determining principal supply in bundled EPC requires judgement.
Rate revisions. Periodic GST Council notifications change SAC-rate mapping.
Sector-specific clarification gaps. Some solar service categories have evolved through clarifications.
Smaller business overhead. Compliance burden on small EPCs.
Customer ITC mismatch risk. Supplier-side errors propagate to customer reconciliation.
Service vs goods boundary. Solar EPC blurs the boundary; classification can be debated.
SAC codes for solar services
| Service | Typical SAC chapter | Notes |
|---|---|---|
| Solar PV system installation | 9954 / 9987 | Verify specific 6-digit and rate |
| Solar system design and engineering | 9987 / 9983 | Engineering / consulting services |
| AMC (Annual Maintenance Contract) | 9987 | Maintenance services chapter |
| Commissioning services | 9954 / 9987 | Part of installation services |
| Solar consulting | 9983 | Professional consulting |
| Repair services | 9987 | Maintenance and repair |
| Solar plant O&M (utility-scale) | 9987 / 9954 | Combined operation and maintenance |
Quick facts
| Full form | Services Accounting Code |
|---|---|
| Function | Services classification code for GST invoices |
| Digits | 4 to 6 (digit count depends on turnover) |
| Counterpart for goods | HSN code |
| Solar installation chapter | 9954 / 9987 |
| Source | CBIC services schedule, GST Council notifications |
| Mandatory above turnover | ₹5 crore for full 6-digit SAC |
| Impact on ITC | Correct SAC supports customer ITC claim |
Common mistakes about SAC codes
- Using HSN for services. Services use SAC, not HSN.
- Generic SAC across all service lines. Each service has its specific code.
- Outdated SAC references. Verify current CBIC notification.
- Composite supply mishandling. Principal supply rule determines dominant rate.
- Skipping SAC above threshold. Mandatory above ₹5 crore.
- Customer-side ITC risk from wrong SAC. Affects reconciliation.
- Confusing 4-digit and 6-digit SAC. Digit precision depends on business size.
- Manual lookup repeatedly. Use accounting software with SAC master.
Key takeaways
- SAC is the services classification code on Indian GST invoices.
- Solar installation services typically under SAC chapter 9954 or 9987.
- HSN classifies goods; SAC classifies services.
- Required 4-digit (smaller businesses) or 6-digit (above ₹5 crore turnover).
- Wrong SAC affects GST rate, ITC eligibility, and audit defence.
- Composite supply rule applies when EPC bundles goods and services.
- CBIC notifications update SAC-rate mapping; verify currently applicable.
Frequently Asked Questions
What is a SAC code?
SAC stands for Services Accounting Code. It is the 6-digit classification code used on Indian GST invoices to identify services being provided. For solar businesses, SAC codes apply to installation, design, commissioning, AMC, and consulting services. SAC is the services counterpart to HSN (goods).
What is the SAC code for solar installation services?
Solar installation and commissioning services typically classify under SAC chapter 9954 (construction services) or 9987 (maintenance and installation services), with specific 6-digit subcodes for solar PV system installation. Verify the current SAC and rate against CBIC notifications.
Are SAC codes mandatory on invoices?
Yes, services on GST invoices need the appropriate SAC code. Above ₹5 crore aggregate annual turnover, full 6-digit SAC is required. Smaller businesses use 4-digit or higher classification level.
What is the GST rate on solar installation services?
Solar EPC services typically attract GST at the rate notified for the relevant SAC. Recent notifications place much of solar EPC service at 12 percent (matching the broader solar sector rate), though specific scenarios vary. Always verify against current GST Council notifications.
How is SAC different from HSN?
HSN codes identify goods (modules, inverters, mounting). SAC codes identify services (installation, design, AMC). A solar EPC contract often involves both: HSN for the materials supplied, SAC for the services rendered.
Where do I find SAC codes?
CBIC publishes SAC schedules on cbic.gov.in. The Services Schedule under GST Council notifications lists SAC codes by chapter, with corresponding tax rates and conditions.
What if my service is bundled with goods?
Bundled supplies (goods + services as one contract) require careful GST treatment. Composite supplies follow the principal supply rule. Mixed supplies attract the highest rate. Solar EPC contracts typically treat as composite with the appropriate dominant rate.
Do AMC contracts use SAC codes?
Yes. Annual maintenance contracts for solar systems use SAC codes under maintenance services chapters. The rate depends on the specific SAC and current notifications.
Are design and engineering services SAC-coded?
Yes. Engineering, design, and consulting services in solar projects use SAC codes under professional services chapters.
Can SAC codes change?
Yes. GST Council notifications can update SAC codes and rates. Verify current SAC before invoicing.
Do small EPCs need to use SAC codes?
Yes, but at lower digit precision. Smaller businesses (below ₹5 crore turnover) typically use 4-digit SAC. Above the threshold, full 6-digit is required.
What is the relationship between SAC and ITC?
Correct SAC on the supplier's invoice supports the customer's ITC claim. Mismatched or wrong SAC can lead to ITC reversal during audit. Clean SAC coding is part of clean ITC documentation.
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- Central Board of Indirect Taxes and Customs (CBIC). SAC schedules and service classification. cbic.gov.in
- GST Council Services Schedule. SAC-rate mapping.
- Ministry of Finance. Budget changes affecting service classifications.
- ICAI publications. Sector-specific SAC guidance.
- State Tax Departments. State-level service tax administration.
- GST Network (GSTN). SAC code reference in invoicing tools. gst.gov.in
- Indian Chartered Accountancy guidance. Composite vs separate supply treatment.
Written by QuickEstimate Editorial, QuickEstimate Editorial (Surat).
Last updated: 4 June 2026.