GST on Delivery Charges: Logistics and Shipping Tax Rates
From online shopping to food delivery and courier services, delivery charges are now a part of almost every purchase. But are these delivery charges taxable under GST? If yes, at what rate? In this guide, we break down the gst on delivery charges, how it applies to different industries, and what sellers and customers need to know.
BOOK A FREE DEMO
Are Delivery Charges Taxable Under GST?
Yes. As per GST supply rules, delivery, shipping, or transportation charges are considered part of a composite supply when billed along with the main product or service. This means:
- If a seller charges separately for delivery, GST is applied at the same rate as the main product or service.
Delivery Charges GST Rate: By Use Case
| Type of Delivery Service | GST Rate | Applies To |
|---|---|---|
| Delivery charges with product | Same as product | e.g., GST on delivery charges of goods |
| Food delivery platforms (Swiggy/Zomato) | 5% | Collected by platform |
| Courier and logistics service | 18% | Standalone shipping or courier billing |
GST on Delivery Charges of Goods
If you’re an online seller or business delivering goods and charging for shipping:
- The gst on delivery charges of goods follows the same rate as the product being delivered.
| Main Product | GST Rate | Delivery Charge GST Rate |
|---|---|---|
| Clothing (₹1000+) | 12% | 12% |
| Electronics | 18% | 18% |
| Books (Exempt) | 0% | 0% (if part of same invoice) |
GST on Food Delivery Charges
For platforms like Swiggy and Zomato:
- Since Jan 1, 2022, the platform collects 5% GST on the total order including delivery.
- Restaurants no longer charge GST directly to the customer.
Courier and Logistics Services
When logistics services are billed separately and not as part of product supply, the following GST rates apply:
| Service | SAC Code | GST Rate |
|---|---|---|
| Courier or parcel delivery | 9968 | 18% |
| Goods transport by GTA (no ITC) | 9965 | 5% |
| Goods transport by GTA (with ITC) | 9965 | 12% |
Input Tax Credit on Delivery Charges
Businesses can claim Input Tax Credit (ITC) on:
- Courier/shipping invoices under business GSTIN
- Freight and delivery services used in supply chain
- Logistics billed for B2B supply
Conclusion
Understanding the gst on delivery charges helps sellers and buyers manage costs and stay tax-compliant. Whether it’s a food order or an eCommerce parcel, delivery services are an integral part of the GST regime and must be handled correctly in invoicing and reporting.
As a Chartered Accountant with over 18 years of experience, I have honed my skills in the field and developed a genuine passion for writing. I specialize in crafting insightful content on topics such as GST, income tax, audits, and accounts payable. By focusing on delivering information that is both engaging and informative, my aim is to share valuable insights that resonate with readers.
Frequently Asked Questions (FAQs)
- What is the GST on delivery charges in India?GST on delivery is equal to the product’s GST rate if bundled. If charged separately, it may attract 18%.
- What is the delivery charges GST rate for courier services?Courier and logistics services are generally taxed at 18%.
- Is GST applicable on food delivery charges?Yes. Platforms like Zomato and Swiggy collect 5% GST on the total food bill, including delivery.
- Can a seller charge different GST on delivery than on the product?No. If billed together, GST on delivery must match the main product’s rate.
- Can Input Tax Credit be claimed on shipping costs?Yes, if used for business and invoiced in the company’s name.
