GST Rate for IT Services in India: Software Development, Support & More
The Information Technology (IT) sector is the backbone of modern India, covering everything from software development to cloud hosting and tech support. But how does GST (Goods and Services Tax) apply to these services? In this blog, we’ll explain the GST rate for IT services in India, what qualifies as an IT service, and how businesses in this space can manage their tax obligations.
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Are IT Services Taxable Under GST?
Yes, most IT services are fully taxable under GST, and the standard rate is 18%.
IT services fall under SAC Code 9983 – Information Technology Services, which includes:
- Software development
- IT consulting
- Cloud-based solutions
- Data processing and hosting
- Technical support and maintenance
- System integration services
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GST Rate for IT Services in India
| IT Service | SAC Code | GST Rate |
|---|---|---|
| Software development (customized) | 9983 | 18% |
| IT consulting services | 9983 | 18% |
| Cloud hosting (SaaS, IaaS) | 9983 | 18% |
| Tech support and maintenance | 9983 | 18% |
| Data storage or processing services | 9983 | 18% |
GST on Software – Product vs Service
| Type of Software | GST Rate | Category |
|---|---|---|
| Off-the-shelf (boxed/downloadable) software | 18% | Treated as goods (HSN Code 8523) |
| Customized software development | 18% | Treated as service (SAC 9983) |
| Software as a Service (SaaS) | 18% | Treated as service |
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Export of IT Services – Is GST Applicable?
No! Export of services (to clients outside India) is zero-rated under GST.
- Exporters must register under GST
- File LUT (Letter of Undertaking) to export services without paying GST
- Or pay GST and later claim refund
This benefits freelancers, SaaS businesses, and IT firms serving overseas clients.
Input Tax Credit (ITC) for IT Companies
Yes, businesses offering IT services can claim Input Tax Credit on:
- Office rent and utilities
- Software tools and licenses
- Internet and hosting services
- Marketing/advertising spend
- Subcontractor invoices
Proper billing and GST-compliant invoices are required to utilize this benefit.
I am a Fellow Chartered Accountant (FCA) and LLB graduate with 10 years of experience in corporate auditing, taxation, and financial consulting. My expertise includes corporate audits, income tax planning, HSN code classification, and GST rate advisory. Through my blogs and articles, I aim to simplify corporate taxation, auditing, and GST compliance, making financial matters more accessible for professionals and business owners.
Frequently Asked Questions (FAQs)
- What is the gst rate for it services in India?The standard GST rate is 18%, applicable to all core IT services.
- Is GST applicable on software development?Yes. Customized software development is considered a service and taxed at 18%.
- Are software subscriptions (SaaS) taxable?Yes. SaaS and cloud services are treated as IT services and taxed at 18%.
- Can IT companies claim Input Tax Credit?Absolutely. GST-registered IT companies can claim ITC on their business expenses like rent, internet, marketing, and subcontractors.
- Do freelancers offering IT services need to pay GST?Yes, if their turnover exceeds ₹20 lakh (₹10 lakh in NE states). They must register and collect 18% GST on their invoices.
