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HSN Code for Freight Charges in India: GST Classification and Rates

Freight does not have one universal HSN code. Find out how India’s GST rules distinguish freight bundled with goods from separate transport services, including heading 9965 and conditional GTA rates.
From TheFinanceBase Team4 min to read
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There is no single HSN code for every freight charge in India. HSN classifies goods; transport is a service. If freight forms part of a composite supply of goods, the GST e-invoice portal says to use the HSN and rate of the principal supply. If transportation is supplied separately, classify the transport service under the applicable service heading—CBIC lists goods transport services under heading 9965. The right treatment depends on what was supplied, how it was supplied, and who is liable for GST.

Is there an HSN code for freight charges?

Not a universal one. A line labelled “freight” can refer either to a charge included in a supply of goods or to a distinct transport service. Those are different GST classification questions. HSN applies to goods; services use service classification, commonly referred to as SAC.

The official GST e-invoice FAQ says that when freight is part of a composite supply, the HSN code and rate of the principal supply apply. Where freight is a separate service, CBIC’s GST rate table classifies goods transport services under heading 9965. The label on an invoice alone does not determine which treatment applies.

How to classify freight on an invoice

  1. Decide what the customer is buying. If freight is part of a composite supply of goods, use the principal supply’s HSN and applicable rate, as stated in the GST e-invoice FAQ.
  2. Check whether transport is separately supplied. The e-invoice FAQ says a separate freight charge should be shown as a separate line item. A separate line is an invoicing practice; it does not, by itself, settle whether a charge is a distinct supply for GST purposes.
  3. Identify the transport mode and service. For a separately supplied transport service, use the relevant service classification. CBIC places goods transport services under heading 9965, which covers multiple transport categories.
  4. Check the provider and tax liability. For road transport, determine whether the provider is a goods transport agency (GTA), whether it issues a consignment note, and who is liable to pay GST. These facts affect the applicable entry and rate.

What does service heading 9965 cover?

CBIC’s GST Goods and Services Rates table identifies heading 9965 as “Goods transport services.” The heading is not one code for every kind of freight: its entries distinguish transport by rail, vessel, GTA, multimodal transport, ropeway and other transport. Select the relevant service category based on the actual transaction rather than treating 9965 as a universal answer for every charge described as freight.

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When does GTA treatment apply?

A goods transport agency is defined by the nature of its road-transport service and its document: it provides services in relation to road transport of goods and issues a consignment note, by whatever name called. See the relevant CBIC notification material. A road carrier that does not issue a consignment note should not automatically be treated as a GTA; nor should rail, vessel, courier, freight-forwarding or supporting services be collapsed into the GTA category without checking their classification.

CBIC’s rate table shows different GTA treatments, subject to conditions:

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  • Where the GTA does not exercise the option to pay tax itself, the table shows 5% GST, subject to the listed input-tax-credit condition.
  • Where the GTA opts to pay tax itself, the table shows 5% or 12%, with the corresponding conditions in the rate entry.

These are not automatic rates for all freight charges, all transport providers, or every GTA invoice. Confirm the precise rate entry, who is liable for tax, and the applicable input-tax-credit condition for the transaction. Do not choose a rate from the word “freight” alone.

How are loading, packing and warehousing connected to GTA transport treated?

CBIC Circular No. 234/28/2024-GST clarifies the treatment of ancillary services supplied by a GTA in the course of road transportation. Examples include loading or unloading, packing or unpacking, transshipment and temporary warehousing. When supplied in the course of the road-transport service, these ancillary or incidental services are treated as part of the composite transport supply; the method of invoicing generally does not change the nature of that supply.

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The circular draws a boundary: services that are not provided in the course of transportation and are invoiced separately are not treated as part of that composite transport supply. Consider the connection to the transport service and the circumstances of supply, not just whether the charge has its own invoice line.

What should a GTA road-transport invoice include?

CBIC’s invoice rules require a GTA supplying road transportation in a goods carriage to issue a tax invoice or equivalent document containing prescribed particulars. Check for:

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  • Gross weight of the consignment
  • Names of the consignor and consignee
  • Vehicle registration number
  • Details of the goods transported
  • Origin and destination of the goods
  • GSTIN of the person liable to pay tax—the consignor, consignee or GTA, as applicable
  • Other particulars required by the general invoice rule

These are document checks, not a substitute for determining the correct classification, rate or person liable for GST.

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How to handle a freight charge when calculating GST

First establish whether the freight amount belongs to a composite supply of goods or is consideration for a separately supplied transport service. For the former, the e-invoice FAQ directs users to the principal supply’s HSN and rate. For the latter, identify the service under heading 9965 and check the transport mode, GTA status, tax-liability rules and applicable rate conditions. If the charge is for an ancillary service connected with GTA road transport, apply the distinction in Circular No. 234/28/2024-GST between services supplied in the course of transportation and those outside it.

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Insurance charges should also be assessed in the context of the transaction rather than assigned a freight code simply because they appear alongside freight. The official sources cited here establish the freight and transport classification principles; they do not establish one universal code or rate for every insurance-and-freight combination. For a transaction with unclear terms or tax liability, verify the applicable GST provisions with a qualified tax professional.

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