Tool Rental Under SAC Code 997327

Tool and DIY equipment rental services involve giving small machinery, power tools and do it yourself equipment on hire for home improvement, repair and hobby projects. Households and small contractors use tool rental when they need machines only for short jobs instead of buying them. Under GST, these services come under SAC 997327. This SAC code and its GST rate decide how GST is charged on DIY machinery and tool rental charges.

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997327 SAC Code GST Rate

Review old and new GST rates for Tool Rental under 997327 SAC Code.

Under GST, leasing, rental and licensing services are treated as supply of services even when the underlying item is a movable good or an intangible like software. The taxable value normally includes base rental or licence fees, recurring usage charges and any service components that form part of the agreement price.

After the September 2025 GST slab revision, most taxable rental and licensing services that do not enjoy any special exemption or concessional entry are placed in the 18% slab with input tax credit for eligible registered recipients. Service providers should still track the latest notifications to confirm if any specific relief applies to their sector.

The table below gives the prevailing standard GST rate for SAC code 997327 for tool and DIY equipment rental services.

SAC Code

997327

Description

Leasing or rental services concerning do-it-yourself machinery and equipment

New Rate

Same rate as the goods leased

Old Rate

Same rate as the goods leased

Notes

Leasing or renting goods, with or without an operator, is taxed at the GST rate that applies to selling the same goods, so check the rate of the item leased (for example 5%, 18% or 40%). Source: Notification 11/2017-Central Tax (Rate), S. No. 17(viia), as amended by 27/2018 and 20/2019.

In most practical cases these services are taxed at 18%, and eligible registered business customers can claim input tax credit when the service is used for making taxable outward supplies. Service providers should apply the correct GST rate in % on the invoice value, mention the SAC code clearly and follow the same treatment in their GST records so that compliance stays smooth for both sides.

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Practical Classification Guidance

Service providers should map their main offering to the closest SAC code, whether they rent household linen, clothing, tools, other goods or provide software and database access. Using the correct six digit SAC and GST rate in % makes billing transparent, supports proper input tax credit for customers and reduces the chance of classification disputes during GST checks.

Conclusion

SAC 997327 relates to tool and DIY equipment rental services where small machinery and tools are hired for home improvement or minor project work. These rentals are usually taxed at 18% under GST with input tax credit for eligible registered users. When businesses apply SAC 997327 correctly and maintain clear billing, it becomes easier to manage both project costs and GST compliance.

Frequently Asked Questions

Clear answers to common queries about SAC Code 997327 and GST compliance.

What does SAC code 997327 cover in GST?

SAC 997327 covers rental of tools and small equipment for home improvement, repairs and DIY projects. It includes items like drills, cutters, sanders, small mixers and similar portable tools offered on short term hire by hardware stores or rental shops to homeowners and small contractors.

Does SAC 997327 include DIY tool and power equipment rental for home projects?

Yes. When customers borrow power tools or hand tools from a rental shop for a few hours or days to do their own repairs or projects, this is usually classified under SAC 997327. The tools remain property of the rental provider, and charges are based on agreed rental periods.

What GST rate applies to tool rental services under SAC 997327?

Tool rental services under SAC 997327 are generally taxed at 18%. GST is charged on the rental fee and any extra costs like damage charges or late return fees. Where the provider is below registration limit, GST may not be charged, but then customers cannot claim input tax credit.

Should hardware stores use SAC 997327 on invoices for tool hire?

Yes. Hardware or equipment stores that earn income by renting tools should issue GST invoices mentioning SAC 997327 whenever they are registered under GST. This separates rental income from regular sales of tools and helps in proper accounting, return filing and recognition of the correct nature of supply.

Can contractors claim ITC on GST paid for SAC 997327 rentals used in jobs?

Registered contractors who hire tools for use in their GST taxable projects generally can claim ITC on GST paid under SAC 997327. The tools are directly linked to their taxable works. They should keep detailed invoices and correlate rentals with particular projects to support ITC claims if questioned.

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Important Disclaimer

The above does not constitute professional advice or a formal recommendation. We recommend consulting a professional tax consultant before acting on the information contained in this piece of content.