What GST on Shipping Charges Actually Means
When a seller or logistics provider moves goods from one point to another and charges a fee for that movement, the fee is treated as a supply of service under India's GST law. As a service, it attracts GST based on the applicable SAC (Services Accounting Code), not an HSN code, which is reserved for goods.
The critical distinction is between two scenarios. First, when a courier company or express logistics provider (think blue-dart-style operators) charges for door-to-door delivery, the service is classified as a courier service, typically under SAC 996812, and the applicable rate is 18% GST. Second, when a Goods Transport Agency (GTA) moves consignments by road under a consignment note, the rules shift to a special GTA framework with lower rate options.
For most e-commerce sellers transacting with end consumers, courier services are the dominant model — which means 18% GST on the freight component is the default reality. Understanding this distinction early prevents the common mistake of assuming all freight is taxed the same way regardless of the carrier type or the legal instrument (consignment note versus airway bill) used to execute the shipment.
GST Rates and SAC Codes for Different Types of Freight
India's GST rate schedule does not apply a single rate to all freight services. The rate depends on who carries the goods and under what legal arrangement.
For courier services — which most D2C and marketplace sellers use — the applicable SAC is 996812 and the GST rate is 18%. This covers parcels moved by air or road under express logistics networks. For road freight under a GTA, the SAC falls under 9965 or 9967, and the GTA can choose between two rate structures: 5% GST with no input tax credit, or 12% GST with full ITC eligibility. The GTA must declare its choice at the start of a financial year, and this election affects what the recipient business can claim.
Air freight for domestic shipments is generally taxed at 18%. For international air freight on imports, the service is taxable under the reverse charge mechanism (RCM), where the Indian importer pays GST directly to the government rather than to the foreign airline or freight forwarder. Ocean freight on imports has had a complex regulatory history, and sellers engaged in international procurement should verify the current notification status with their tax advisor.
Freight forwarding and ancillary logistics services typically use SAC 9967, while warehousing-related services carry their own distinct codes. Mapping each service to the right SAC is essential for clean ITC claims and error-free GSTR filings.
How to Show Shipping Charges Correctly on an Invoice
The way shipping charges appear on a customer-facing invoice determines the GST treatment — and sellers frequently get this wrong in one of two directions.
If shipping is listed as a separate line item on an invoice (for example, 'Delivery Charges: ₹X + GST'), it is treated as a distinct supply of service. The seller must apply the applicable GST rate to that line — typically 18% for courier-style delivery — and declare it separately in their GST returns. The customer, if a registered business, can then claim ITC on that GST, provided the supply meets eligibility criteria.
If shipping is bundled into the product price with no separate disclosure, the transaction is likely a composite supply, where the principal supply (the goods) governs the tax rate. This simplifies invoicing but eliminates the customer's ability to identify and claim ITC on freight specifically.
A third scenario arises when a seller merely recovers freight costs from the buyer — acting as a pure cost-pass-through rather than a service provider. Even in this case, GST authorities have generally held that the recovery constitutes a taxable supply, so the safe approach is to levy GST on the amount recovered.
The GST invoice must clearly state the SAC code applicable to any service line item. Omitting the SAC from a B2B invoice is a compliance gap that can lead to ITC disallowance for the buyer and notices for the seller.
Shipping Charges on Food Delivery and E-Commerce Platforms
Two sectors where GST on delivery charges creates particular confusion are food delivery and e-commerce marketplace transactions.
For food delivery platforms, the delivery charge collected from the customer is a separate service supply distinct from the food itself. The food supplied by a restaurant may carry a different GST rate (or even be exempt if supplied by certain small establishments), but the delivery fee charged by the platform or aggregator is generally taxed at 18% as a logistics service. Sellers and restaurant partners operating on these platforms should confirm how the platform splits and reports these charges in the GST returns it files on their behalf, since platforms can be deemed suppliers under the e-commerce operator provisions.
For e-commerce sellers on marketplaces, the platform's TCS (Tax Collected at Source) mechanism operates on the net value of taxable supplies, which may or may not include shipping charges depending on the platform's invoicing structure. Sellers should reconcile their GSTR-2A or GSTR-2B data against platform settlement statements to verify that shipping-related GST flows are being captured correctly.
A common mistake in both sectors is assuming that because the underlying supply (food, a product) is exempt or zero-rated, the delivery charge is similarly exempt. The GST law evaluates each supply element independently unless a composite supply relationship is clearly established — and that requires the delivery to be an integral, ancillary part of the principal supply rather than a separately negotiated or optional service.
Reverse Charge on Air Freight for Imports and Cross-Border Shipping
Indian businesses that import goods via air or sea frequently encounter GST obligations they did not anticipate: the reverse charge mechanism (RCM) on freight services supplied by foreign carriers or freight forwarders.
Under RCM, when the supplier of a service is located outside India and the recipient is a registered Indian business, the Indian recipient must self-assess and pay the GST directly to the government. No invoice from the foreign party carries Indian GST — instead, the Indian importer issues a self-invoice, accounts for the output tax liability, and simultaneously claims ITC on the same amount (subject to ITC eligibility conditions).
For air freight on imports, this means the cost of freight quoted by a foreign airline or agent is exclusive of Indian GST, but the importer has a GST liability to discharge. This liability must appear in GSTR-3B under the reverse charge head, and the corresponding ITC can be claimed in the same return period if the inputs are used for taxable outward supplies.
Ocean freight has seen regulatory changes and legal disputes, and the position has evolved over GST's history — importers should not rely on older compliance practices without confirming the current legal position. For sellers who ship internationally as exporters, outbound freight is generally zero-rated as part of the export transaction, but documentation discipline (shipping bills, LUTs, bond filings) is essential to substantiate the zero-rating claim during audits.
Practical Compliance Steps for E-Commerce Sellers
Building a clean GST compliance posture around shipping charges requires sellers to address four operational areas systematically.
First, classify your logistics partners correctly. Determine whether each carrier is a courier company (18% GST, SAC 996812) or a GTA (5% or 12% GST under RCM or forward charge depending on the recipient). Keep copies of the carrier's GST registration and, for GTAs, their rate-election declaration.
Second, standardise your invoice template. Every B2B invoice you raise must include the SAC code against any shipping line item. Confirm whether your accounting software or ERP auto-populates SAC codes, and audit a sample of past invoices to identify gaps.
Third, reconcile ITC on inbound freight regularly. Freight payments you make to logistics providers generate ITC that you can offset against your output tax. Cross-check GSTR-2B data against your freight bills monthly, because unreconciled ITC expires.
Fourth, handle RCM obligations for imported goods proactively. If your business imports merchandise or raw materials, establish a workflow to identify RCM-triggering freight invoices, issue self-invoices promptly, and capture both the liability and the ITC claim in the correct GSTR-3B filing period.
Sellers who scale from a handful of orders to thousands of shipments monthly often discover that their early invoicing shortcuts — no SAC code, no GST on delivery charges — create retrospective liability that is expensive to unwind. Building the right habits early is materially cheaper than correcting them during a departmental audit.