GST is a unified indirect tax levied on the supply of goods and services in India. For services, GST is applicable at the time of supply, and it's collected by the service provider from the recipient.
Supply: Includes all forms of supply like sale, transfer, lease, or exchange for a consideration.
Service: Anything other than goods, money, or securities. It includes activities related to the use of money or its conversion.
Consideration: Payment in money or in kind received for a service.
Standard Rate: 18%
Reduced Rate: 5% or 12% (applicable for specific services like transportation, food services, etc.)
Exempted Services: No GST is charged (e.g., healthcare, education, certain financial services)
???? You can check the GST rate of a specific service using the GST Rate Finder from the CBIC website.
Determines when GST is to be paid:
If invoice is issued within 30 days – earlier of:
Invoice date
Date of payment
If invoice is NOT issued within 30 days – date of service completion or payment
Determines whether CGST + SGST (intra-state) or IGST (inter-state) is applicable.
Within same state: CGST + SGST
Between different states: IGST
For certain services (like online services), special rules apply
Businesses can claim credit for the GST paid on input services used to provide taxable services. Some restrictions apply.
Exempt: No GST applicable (e.g., basic education, healthcare)
Nil-rated: GST rate is 0% (very rare for services)
Mandatory if aggregate turnover exceeds ₹20 lakhs (₹10 lakhs in special category states)
Voluntary registration allowed
Must file regular GST returns (GSTR-1, GSTR-3B, etc.)
In some cases, the recipient of the service pays the GST instead of the supplier. Examples:
Services from an unregistered supplier
Legal services from an advocate
GTA (Goods Transport Agency) services
| Service Type | GST Rate |
|---|---|
| Restaurant Services | 5% or 18% |
| Hotel Accommodation (<₹7500) | 12% |
| Telecom Services | 18% |
| Online Streaming (OTT) | 18% |
| Education (core services) | Exempt |
| Legal Services (RCM basis) | 18% |
Issue tax invoice with GSTIN
File monthly or quarterly returns (GSTR-1, GSTR-3B)
Maintain records for 6 years
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Goods and Services Tax (GST) is a unified indirect tax system in India that applies to the supply of both goods and services. It has replaced many indirect taxes previously levied by the Central and State governments.
Under GST, "service" means anything other than goods, money, and securities. It includes transactions related to the use of money or its conversion for which a separate consideration is charged.
Services are generally taxed at different GST rates based on the nature of the service.
| Service Category | GST Rate |
|---|---|
| Standard services (most B2B/B2C) | 18% |
| Transport, economy restaurants | 5% |
| Hotels (?1000–?7500) | 12% |
| Premium restaurants | 18% |
| Education (core services) | Exempt |
| Healthcare (except cosmetics) | Exempt |
Time of supply determines when the GST liability arises.
If invoice is issued within 30 days of service: Earlier of:
Date of invoice
Date of payment received
If invoice is not issued within 30 days:
Date of completion of service or date of payment, whichever is earlier
Place of supply determines the nature of the GST:
Same state: CGST + SGST
Different states: IGST
International transactions (imports/exports): IGST with special rules
Registered service providers can claim ITC for GST paid on inputs used to deliver taxable services, subject to conditions:
Must have a valid tax invoice
Goods/services must be used for business purposes
ITC not allowed for personal services, blocked credit (e.g., food, club membership)
In certain cases, the recipient of the service pays the GST instead of the service provider. Common services under RCM:
Legal services from individual advocates
Services from a Goods Transport Agency (GTA)
Import of services
Exempt services: No GST charged (e.g., education, public healthcare)
Nil-rated services: GST rate is 0%, but these are rare in services
Mandatory for service providers with turnover > ?20 lakhs (?10 lakhs in special category states)
Voluntary registration allowed for those below threshold
Required for those under RCM or doing interstate supplies
A valid tax invoice for services must contain:
Supplier and recipient details (including GSTIN)
Invoice number and date
Description of services
Value and rate of GST
HSN/SAC code (Service Accounting Code)
Service providers need to file:
GSTR-1: Monthly/quarterly outward supply details
GSTR-3B: Monthly summary of GST liability and ITC
Annual return: GSTR-9, if applicable
Every service is classified under a Service Accounting Code (SAC). Example:
| Service | SAC Code | GST Rate |
|---|---|---|
| IT & Software Services | 998313 | 18% |
| Legal Consultancy | 998221 | 18% (RCM) |
| Education (tuition fees) | 999293 | Exempt |
| Advertising services | 998361 | 18% |
Understanding GST on services is essential for service providers to ensure proper tax compliance and to avoid penalties. Whether you're a freelancer, agency, or a large enterprise, staying up-to-date with GST regulations helps streamline your finances and legal standing.
| Rakesh Garg Sandeep Garg Guide to GST on Services |
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