GST on website development in India: the 18% rate, SAC codes, and what buyers and freelancers get wrong

GST on website development in India is 18%. Website design, development, maintenance and hosting are all taxed at that rate, and the SAC code most invoices use for a website build is 998314. If you buy a website for a GST-registered business, you can usually claim that 18% back. If you sell websites to clients abroad and file an LUT, you charge no GST at all.

The trouble is in the details. One freelancer on r/FreelanceIndia described getting a GST demand on export income from a year when they had skipped one form. The bill: "IGST @ 18%: ₹8,86,454", plus "Interest: ₹6,90,548". One missing step turned a zero-tax export into a ₹15.77 lakh notice.

This guide covers both sides: the business owner reading a quote that says "GST extra", and the freelancer raising the invoice.

The GST rate on website development services in 2026#

The rate is 18%, unchanged by the 2025 overhaul. In its 56th meeting in September 2025, the GST Council moved to a two-rate structure, "a Standard Rate of 18% and a Merit Rate of 5%", plus 40% for a few items, with service rate changes effective from 22 September 2025. IT services, including website work, stayed at 18%. There is no lower rate for a small or template site.

How it shows on the bill depends on where the two parties are:

• Same state (an Ahmedabad studio billing a Surat business): 9% CGST plus 9% SGST.
• Different states (a Mumbai agency billing that same Surat business): 18% IGST in one line.

The total and the buyer's credit are the same either way.

SAC code for website development#

A SAC (Services Accounting Code) is the number that tells the tax system what kind of service you sold. Website work sits in group 99831, as listed in IndiaFilings' SAC guide:

For most builds, 998314 is right; a maintenance-only retainer can use 998313. All carry 18%, so the wrong code rarely changes the tax, but be consistent.

Since April 2021, the rule is at least 4 digits on B2B invoices if last year's turnover was up to ₹5 crore, and 6 digits above that. Writing the full 998314 is always fine.

When a freelancer must register for GST#

Registration is compulsory once your aggregate turnover crosses ₹20 lakh in a financial year (₹10 lakh in Manipur, Mizoram, Nagaland and Tripura). For services, it is ₹20 lakh, not the ₹40 lakh limit for goods that people often quote. Aggregate turnover includes your export income too.

One commenter put it plainly in an r/IndiaTax thread from a freelancer earning about ₹30 lakh, mostly from foreign clients: "Do get a GST now as you have crossed the ₹20L threshold".

Below ₹20 lakh, you can still register voluntarily. Reasons to do it:

• Your business clients may insist on a GST invoice so they can claim credit.
• You can claim back GST on your own laptop, software and hosting.
• You need a GSTIN to file an LUT for export work.

Unregistered freelancers cannot charge GST; adding "18% GST" without a GSTIN is illegal. There is also a 6% composition scheme for small service providers with turnover up to ₹50 lakh (Notification 2/2019), but composition dealers cannot issue a tax invoice that lets the buyer claim credit, so most freelancers serving businesses skip it.

Input tax credit for the business buying the website#

If your business is GST registered and the website is for business use, the 18% is usually not a cost. It comes back as input tax credit (ITC), which you set off against the GST you collect from your own customers.

To claim it, four things need to be true:

1. You hold a proper tax invoice showing your GSTIN.
2. The agency has filed its return, so the invoice shows up in your GSTR-2B (the monthly statement of credit available to you).
3. You have received the service.
4. You pay the agency within 180 days of the invoice date, or the credit is reversed.

There is also a deadline. Credit for a financial year has to be claimed by 30 November of the following year, or when you file the annual return, whichever is earlier.

If you are not registered, or are in the composition scheme, the 18% is a real cost.

Income tax TDS (tax deducted at source) that your accountant may deduct from the payment is separate. It is not a discount.

A worked example#

Take a hypothetical Surat saree wholesaler, GST registered, paying an Ahmedabad studio ₹80,000 for a catalogue website. Both are in Gujarat.

Unregistered, the real cost would be ₹94,400. From a Mumbai studio, the bill would show ₹14,400 IGST instead. For what a website should cost before tax, see our guide to website and MVP costs in 2026.

Export of services: foreign clients and the LUT#

When an Indian freelancer builds a website for a client abroad, it usually counts as an export of services. The conditions are that you are in India, the client is outside India, the place of supply is outside India, you are not branches of the same entity, and you are paid in convertible foreign currency (or in rupees where the RBI allows it).

Exports are zero-rated, which means no GST, but only if you do the paperwork. Before you bill, you must file a Letter of Undertaking (LUT) in Form GST RFD-11 for that financial year. The GST portal's own FAQ says registered taxpayers with zero-rated supplies "have to furnish LUT in Form GST RFD-11 on the GST Portal before affecting such supply". It is free and quick.

Without an LUT, you pay 18% IGST on the export and claim it back as a refund. The freelancer in the opening had no LUT for one year, so the department treated those exports as taxable. Their advice afterwards: check there is an LUT "for every FY you billed foreign clients in".

The export invoice should also carry the line "Supply meant for export under LUT without payment of integrated tax", along with your LUT reference. Keep your bank's FIRA or FIRC (the foreign remittance certificate) for every payment and match each one to an invoice.

An unregistered freelancer below ₹20 lakh, billing only foreign clients, does not need to register just because the work is an export. Once you cross the threshold, register and file the LUT the same week.

What a correct GST invoice shows#

A service tax invoice should have:

• Supplier's name, address and GSTIN
• A unique invoice number (up to 16 characters) and date
• Buyer's name, address and GSTIN (for B2B)
• Place of supply (the state), which decides CGST plus SGST or IGST
• SAC code and a clear description of the work
• Taxable value, GST rate, and tax amount split into CGST and SGST, or IGST
• Total, and a signature or digital signature

Issue it within 30 days of finishing the service. For staged projects, raise an invoice at each milestone that the contract marks as due.

Common mistakes#

1. Quoting a price without saying whether GST is included#

"₹50,000" means ₹59,000 to an unregistered buyer if GST is extra. Write "₹50,000 plus 18% GST" or "₹50,000 including GST" on every quote. In an r/IndiaTax thread about an "all-inclusive" ₹42 lakh contract, one reply worked out that GST inside an inclusive figure is about 6.4 lakh, "because if you assume 42 lakhs to be the entire GST inclusive amount, 35.6 would be you net amount".

2. Charging GST without being registered#

The buyer cannot claim it, and the freelancer has collected tax they had no right to collect.

3. Skipping the LUT for export work#

File it every April for the new financial year.

4. Wrong tax type#

CGST plus SGST to a client in another state can block the buyer's credit. Check the state code in their GSTIN.

5. Marking up domain and hosting without thinking#

If the agency buys the domain and hosting and bills them on, those lines generally become part of its taxable service at 18%. If you register the domain in your own name and pay the registrar directly, the registrar's invoice comes to you and you claim the credit yourself. This is one more reason to keep accounts in your name, as our checklist for hiring a web agency explains.

6. Forgetting GST on foreign tools#

A registered business buying from a foreign provider without Indian GST registration usually pays the GST itself under reverse charge, then claims it back. Add your GSTIN at checkout where offered.

Common questions#

What is the GST rate on website development?#

18%, whether the work is design, development, maintenance or hosting. It did not change in the September 2025 rate cuts.

What is the SAC code for website development services?#

998314, IT design and development services. Maintenance and support retainers can use 998313, and hosting uses 998315. All carry 18%.

Is GST registration mandatory for freelancers?#

Only once aggregate turnover crosses ₹20 lakh in a year (₹10 lakh in four north-eastern states). Below that it is optional.

Is there GST on website design services for foreign clients?#

No, if it qualifies as an export and you have filed an LUT for that year. Without the LUT, you pay 18% IGST and claim a refund.

The short version#

GST on website development is 18% under SAC 998314, with hosting under 998315. A registered business usually gets the 18% back as input tax credit. Freelancers register at ₹20 lakh, never charge GST without a GSTIN, and file an LUT every year before billing foreign clients. Ask a CA about your own numbers, and put the payment and tax terms in a website development agreement. Our own packages are on the pricing page.

Want a website quote with the GST line, milestones and ownership spelled out from day one? Book a free strategy call and we will walk through scope and price with you.