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Alankar Mishra

January 28, 2025

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Basics of GST

Passengers Transport Services GST rate and SAC Code 9964

The Goods and Services Tax (GST) has made indirect taxation in India easier to understand and covers services like passenger transport. Those engaged in the passenger transport business, such as consumers, businessmen, and taxpayers, should know the applicable GST rates and SAC Code 9964. This article covers the provisions of the GST concerning SAC Code 9964 and what it means for the transport business.

What is SAC Code for 9964?

SAC Code 9964 is the code given to Passenger transportation services, which is further divided into classifying categories based on the method of transportation such as rail, road, waterways, and many more. The GST Council issues a particular SAC (Services Accounting Code) code to allocate and systemize the different services under the GST system.

‍Breakdown of SAC Code 9964 Categories

SAC Code 9964 is further divided into subcategories for specific passenger transport services:

HSN Code	Service Description
996411	Local transport and sightseeing services.
996412	Long-distance transport services by road.
996413	Transport services by rail.
996414	Transport services by air.
996415	Transport services by waterways.
996416	Other passenger transport services are not elsewhere classified.

These subcategories help service providers identify the exact classification of their services under GST.

GST Rates for Passenger Transport Services

Passenger transport services are subject to varying GST rates based on the mode of transport and the nature of the service. Below is an overview of the GST rates for different categories under SAC Code 9964:

Category	Service Type	GST Rate	Input Tax Credit (ITC)
Road Transport Services	Buses (Government or Public Sector)	Exempt	Not Applicable
	AC Buses or Private Operators	5%	Without ITC
	Non-AC Buses	Exempt	Not Applicable
Rail Transport Services	First Class or AC Coaches	5%	Without ITC
	Sleeper Class or Unreserved Coaches	Exempt	Not Applicable
Air Transport Services	Economy Class	5%	Without ITC
	Business Class	12%	With ITC
Waterways Transport Services	Cruises or Luxury Boats	18%	With ITC
	Ferry Services	Exempt	Not Applicable
Miscellaneous Services	Tour Packages or Sightseeing	5%	Without ITC
	Other Passenger Transport Services	Applicable rates based on service type	Varies

Exemptions Under SAC Code 9964

To keep bus fares affordable and boost public transport usage, certain public passenger transport services enjoy GST exemption:

1. State and Government-Owned Buses: Applies to non-AC buses only.

2. Rail Transport Services: Exemption is provided for unreserved and sleeper class train tickets.

3. Non-Luxury Ferry Services: Ferry services that serve the general public are not subject to GST.

4. Religious Pilgrimage Transport: Government scheme-approved services for pilgrimage are exempt from GST.

GST Compliance for Passenger Transport Services

The providers of passenger transport services are required to comply with the requirements of GST to prevent incurring fines and for easier business transactions. Some of the essential requirements are:

1. GST Registration: This is needed for all companies which have a turnover of more than ₹20 lakh (₹10 lakh in special category states).

2. Invoicing: GST invoices need to be properly issued and SAC Code 9964 together with the GST rate must be included.

3. Filing GST Returns: GSTR-1 and GSTR-3B, along with all other returns relevant to the business, should be filed within the prescribed deadlines.

4. ITC Utilisation: Knowing the conditions for the usage of ITC is important as there are several services where ITC cannot be claimed.

Impact of GST on Passenger Transport Services

The incorporation of GST has made it easier to quantify passenger transport services. Here are some main impacts.

1. Standardized GST: The standard GST rate replaced various indirect taxes such as service tax, VAT, entertainment tax, etc.

2. Lower Costs: Non-AC and public transport services as well as exemptions ensure affordability for the common man.

3. Greater Clarity: SAC codes such as 9964 have greatly improved clarity on what classifications and tax rates are applicable.

4. Availability of ITC: Service providers of taxable services are in the good fortune of being able to claim ITC, which overall reduces the tax burden.

Challenges Faced by the Industry

Even after acknowledging the benefits, issues still exist for the passenger transport industry under the GST:

1. Difficult Following ITC Rules: There is uncertainty among transport service providers due to limited ITC being available for certain services.

2. High Compliance Requirements: Keeping records and filing returns is an issue for small transport operators.

3. Lack of Clarity in Services Classification: Improper classification of services leads to penalties.

4. Increased Expenses: Ticket prices rise due to higher GST rates on luxury services.

Conclusion

It is crucial to grasp the necessary details about the GST rate and Code 9964, especially for transport service providers and their clients. The framework of the GST system eliminates tax compliance headaches, makes public transport cheaper, and increases accountability. Nevertheless, these bottlenecks in the compliance effort and lack of available ITC must be dealt with to encourage the growth of the industry.

When it comes to transport services, there are a lot of tips and information businesses need to pay attention to such as how best to make use of the available exemptions. We shall be glad to provide additional information that will assist in their day-to-day activities.

FAQs

1. What is SAC 996421?

SAC 996421 is a Service Accounting Code used for ‘Passenger transportation services by road other than by railways’ which refers to the passenger transport services that use buses or motor vehicles, but not trains

2. What does the SAC number on a train ticket represent?

The SAC number found on a train ticket is a Service Accounting Code used for accounting of services during the GST regime, for example, railways freight transport.

3. What is the HSN code for transport services?

The HSN code for transport services varies depending on how the services are provided. For general road transport of passengers, the SAC code is 996421.

‍4. What is the HSN code for transportation services by road?

SAC 996421 is the code for transportation services by road for passengers. Whereas for goods it depends on the service provided.

5. Are transportation of passengers by air exempt from GST?

Under specific criteria, such as economic class, there are certain exceptions which allow for GST exemption but for the most part air passenger transport is not completely free from GST.

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