The phrase freight charges HSN code is the most-searched version of a question that is slightly wrong at the root: freight is a service, and services are not classified under HSN at all. Goods carry an HSN code; services carry a SAC, the Service Accounting Code under Chapter 99 of the same tariff. Transport of goods sits at heading 9965 and supporting services for transport, which covers most of what a freight forwarder or customs broker bills, sits at 9967. Once you see that split, most of the confusion Indian shippers have about GST on freight resolves itself.
Freight charges HSN code: what the search term is really asking
There are two entirely different situations behind that search, and they have different answers.
- You are the seller of goods and you show freight as a line on your own tax invoice. Here freight is not a separate supply. It is ancillary to the supply of goods, the two together are a composite supply, and the goods are the principal supply. The freight line takes the HSN code of the goods and is taxed at the rate applicable to the goods. This is the legal effect of the valuation rule in section 15 of the CGST Act, which pulls incidental expenses including transport charged by the supplier into the taxable value.
- You are a transporter, forwarder or broker raising your own invoice for the service. Here freight is the supply. It carries a SAC from Chapter 99 — 9965 for goods transport, 9967 for supporting services — and is taxed at the rate applicable to that service, which has nothing to do with the HSN of the cargo inside the container.
The single most common error follows directly from mixing these up: a seller of ceramic tiles or dyes shows freight separately on the goods invoice and applies the transport service rate to it, hoping to reduce tax on that line. That is a misclassification of a composite supply, and it is the kind of thing that surfaces in a departmental audit two years later with interest attached.
The mechanism: five questions in order
Instead of memorising a rate, work through the chain. Each answer determines the next.
1. Who is supplying what?
Goods with transport arranged by the seller is a composite supply. A standalone transport or forwarding service is its own supply. Where a forwarder buys space and resells it as principal, it is supplying a transport service, not acting as an agent recovering a cost — a distinction that also decides whether any part of the bill can be treated as a pure agent recovery.
2. What is the correct classification?
Goods take an HSN. Services take a SAC. Within services, road transport by a goods transport agency, rail, coastal and inland waterways, ocean and air all sit under 9965 with different entries, while cargo handling, terminal services, customs clearance and forwarding sit under 9967. Classify the service you actually performed, not the mode your customer thinks they bought.
3. Is anyone acting as a pure agent?
Where a forwarder or broker pays a third party on the client’s behalf and recovers the exact amount without markup, under authority and shown separately on the invoice, the pure agent rule can keep that recovery out of the taxable value. Duty paid on the importer’s behalf is the classic example. The moment a margin is added or the conditions are not documented, the whole amount becomes part of the value of your own service.
4. What is the place of supply?
Place of supply decides IGST versus CGST plus SGST, and for transport services it turns on whether the recipient is registered, and where the goods are being transported to. The rules for a registered Indian recipient, an unregistered recipient, and a foreign recipient are all different, and the rule for transportation of goods to a place outside India has itself been amended. This is the area where invoices most often carry the wrong tax head, and where the wrong head means the customer cannot take credit at all.
5. Who actually pays the tax?
Forward charge is the default. Reverse charge applies in specific listed cases, the best known being services supplied by a goods transport agency, where the specified recipient pays the tax directly rather than the transporter charging it. A GTA can also opt to pay under forward charge by filing the prescribed declaration for the year, and the recipient must know which option the transporter has exercised. A consignment note is what makes a road transporter a GTA in the first place; a transporter who issues none is in a different position entirely.
Exports, imports and the parts that keep changing
Outbound freight on exports has been treated differently at different times. The exemption for transport of goods from India to a place outside India has been extended by notification more than once and has also been allowed to lapse, and the zero-rating position for the exporter interacts with how the freight is billed and to whom. On the import side, the reverse charge levy on ocean freight for CIF imports — where the Indian importer was asked to pay GST on freight contracted between a foreign seller and a foreign shipping line — was struck down by the Supreme Court in 2022, and refund and transitional questions followed from it.
None of those positions should be taken from an article. Before you decide the treatment on a live invoice, confirm the current rate and the governing notification for your exact service, for the period of supply, with your tax advisor or from the CBIC notifications themselves. What does not change is the mechanism above; only the numbers and the exemptions move.
Where shippers get it wrong
- Putting an HSN of goods on a freight invoice, or a SAC on a goods invoice line. Both break the return matching and both invite a query.
- Splitting freight out of a goods invoice to apply a different rate, when it is legally part of a composite supply.
- Assuming all export-related freight is automatically exempt without checking the notification in force for the period.
- Ignoring the GTA forward-charge declaration and either paying twice or not paying at all.
- Claiming pure agent treatment without the paperwork — no authority, no separate disclosure, or a markup added.
- Wrong place of supply, producing CGST and SGST where IGST was due, which normally blocks your customer’s credit.
- Invoice and shipping bill that do not reconcile, which stalls GST refunds because the export data has to match. The full document set is in the export documentation checklist for India.
What to do on your next invoice
If you came here searching for a freight charges HSN code, the working answer is: find the right SAC, then settle the place of supply, then check the notification. In that order.
- Decide whether you are supplying goods or a service, and classify accordingly — HSN or SAC, never both for the same line.
- Check the place of supply rule for that service and the status of your recipient before choosing the tax head.
- Confirm the rate and exemption currently notified for that SAC, for the date of supply.
- Keep the transport document, the shipping bill and the invoice reconciled — description, value and quantity. See the bill of lading guide for what the transport document must show.
- Retain the pure agent authority and third-party invoices where you are recovering costs.
Terms used above are defined in our glossary, and our customs clearance desk in Ahmedabad prepares invoices with the classification and place of supply set out on the face of the document so your accounts team is not guessing.
Talk to Scapex
If your freight invoices are being queried, or you are unsure whether freight belongs on your goods invoice or on ours, send us a sample invoice and the shipment details. Contact Scapex Global Forwarding and we will walk through the classification with you.