Software Licensing Services Under SAC Code 997331
Software licensing services cover the grant of rights to use computer software and databases for a fee, usually through subscriptions, term licences or user based models. Businesses rely on software licensing services to run accounting systems, ERPs, CRMs, database platforms and other applications without buying the underlying intellectual property. Under GST, these services are classified under SAC 997331. This SAC code and its GST rate decide how GST is charged on software licence fees and database access charges.
Software Licensing Services GST Rate for SAC Code 997331
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 explains the current standard GST rate for SAC code 997331 for computer software and database licensing services.
| Code | Description | Old GST Rate (till 21 Sep 2025) |
New GST Rate (from 22 Sep 2025) |
Notes on change / inclusions |
|---|---|---|---|---|
| 997331 | Licensing services for the right to use computer software and databases. | 12% with ITC or 18% with ITC | 18% with ITC | Historic entries showed 12% for some permanent transfers of IPR and 18% for software IPR, plus a time-bound nil rate for certain sports-event related supplies. Recent SAC-specific tools now show 18% as the working rate for this code. With the 12% slab removed from 22 Sep 2025, the typical rate consolidates at 18% with ITC. |
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.
Explore Other SAC Codes Under 9973
All these SAC codes sit under the broader leasing, rental and licensing services heading 9973, which covers temporary use of goods and intellectual property against periodic charges. Each six digit SAC within this heading focuses on a specific type of rental or licensing service so that GST classification remains clear and consistent.
The list below highlights key six-digit SAC codes under 9973.
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 997331 is used for software licensing services where users get rights to use computer software and databases against licence or subscription fees. These services are typically taxed at 18% under GST, and registered customers may claim input tax credit when the software supports taxable business operations. Choosing SAC 997331 and the correct GST rate in % helps both software providers and clients maintain clean invoicing and GST documentation for digital tools.
Important Disclaimer
The entire content on this page has been arranged to the best of the author's understanding and is subject to periodic updates as per the law for the time being in force. The above does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this content, the existence of mistakes and omissions cannot be ruled out. BUSY Infotech Private Ltd. and its associates will not be held responsible for any loss or damage arising from any inaccurate or incomplete information in this document. We recommend consulting a professional tax consultant before acting on the information contained in this piece of content.
Frequently Asked Questions
-
What does SAC code 997331 cover in GST?
SAC 997331 covers licensing services for software and databases. It includes granting rights to use standard software, access online databases or install on premise software for a fee. This can be one time licence, subscription based access, or renewal of user rights for business or personal use.
-
Does SAC 997331 include licensing and usage rights for software and databases?
Yes. When a vendor charges for the right to use software, whether download, cloud based or database access, it usually falls under SAC 997331. The customer does not acquire full ownership of the intellectual property but only usage rights as per licence terms, duration and user count.
-
What GST rate applies to software licence fees under SAC 997331?
Software and database licensing under SAC 997331 is generally taxed at 18%. GST is charged on licence fees, subscription charges and related support if bundled. Special rules may apply where software is classified as goods, but most standard and SaaS type licences are treated as services at this rate.
-
Are SaaS subscriptions and on premise licences both billed with SAC 997331?
Yes. Most SaaS subscriptions, on premise software licences and database access agreements are billed with SAC 997331, unless clearly covered by a more specific code. The difference is in deployment model, not in GST category. Vendors should describe the licence type clearly so customers understand the service received.
-
Can businesses claim ITC on GST paid for SAC 997331 licences used for operations?
Registered businesses can usually claim ITC on GST paid for SAC 997331 licences where the software supports accounting, operations, production, marketing or other taxable activities. ITC is not allowed on software used mainly for non business or exempt activities. Proper licence invoices and usage records help support credit claims.