Freight HSN Code: Understanding HSN Classifications for Freight Charges
Freight is the amount you pay to move goods from one place to another. Under GST, freight charges are treated as a service and must be shown with the correct HSN or service code on the invoice.
When you know the right freight HSN code, you can charge GST correctly, claim input tax credit smoothly and keep your GST returns in order as a trader, manufacturer, transporter or service provider.
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Freight SAC Code Classification and GST Rates
Here are some commonly used HSN codes and GST rates for this category
4 Digit SAC Code Classification
| HSN/SAC Code | HSN/SAC Code Title | GST Rate |
|---|---|---|
| 9965 | Other Goods transport services | 18% |
| 9966 | Other Rental services of Transport vehicles with or without operators | 18% |
| 9967 | Other Supporting services in transport | 18% |
| 9971 | Other Financial and related services | 18% |
| 9973 | Other Leasing or rental services, with or without operator | Same rate of integrated tax as applicable on supply of like goods involving transfer of title in goods |
6 Digit SAC Code Classification
| HSN/SAC Code | HSN/SAC Code Title | GST Rate |
|---|---|---|
| 996511 | Road transport services of Goods including letters, parcels, live animals, household & office furniture, containers etc by refrigerator vehicles, trucks, trailers, man or animal drawn vehicles or any other vehicles.(other than GTA) | 0% |
| 996532 | Space transport services of freight | 18% |
| 996602 | Rental services of water vessels including passenger vessels, freight vessels etc with or without operator | 18% |
| 996603 | Rental services of aircraft including passenger aircrafts, freight aircrafts etc with or without operator | 18% |
| 996791 | Goods transport agency services for road transport | 5% – No ITC or 18% with ITC |
| 996792 | Goods transport agency services for other modes of transport | 5% – No ITC or 18% with ITC |
| 996793 | Other goods transport services | 5% |
| 997136 | Freight insurance services & Travel insurance services | 18% |
| 997145 | Freight reinsurance services | 18% |
* GST rates may vary based on the latest GST notifications and amendments
HSN Code for Freight Charges and Outward Freight
In daily business language, people often talk about inward freight and outward freight . Inward freight is the cost you pay to bring goods into your business. Outward freight is the cost you charge or bear to send goods to your customer.
Under GST, both inward freight and outward freight are still the same type of service, that is goods transport service. So the freight charges HSN code for both flows is usually 9965. The code does not change only because the direction of movement changes.
What really changes is who is supplying the freight service and who is paying GST. For example, if a registered goods transport agency raises a freight bill to you, they will use freight HSN code 9965 and GST may apply either under forward charge or under reverse charge depending on the rules.
If you are a trader who sells goods and recovers freight from the customer on the sale invoice, many businesses still treat that component as a supply of transport service linked with the sale. In that case the outward freight line is also mapped to the same freight HSN code, although the tax treatment and place of supply rules must be checked carefully.
Because the same HSN code for freight charges is used for both inward and outward freight, it becomes easier to track all freight costs and freight income in GST returns and in your accounting system.
Freight GST Rates and HSN Code Classification
The HSN code for freight tells you that the service is a transport service, but the GST rate for freight under 9965 depends on the mode of transport and the conditions of supply.
Some common cases for freight charges HSN code and GST rate are as follows.
- Goods transport agency services by road often attract 5% GST without input tax credit , or 12% GST with input tax credit when the agency chooses that option. In some situations GST is paid by the recipient under reverse charge.
- Transport of goods by rail for most goods usually attracts 5% GST with some restrictions on input tax credit.
- Transport of goods by vessel or coastal shipping often attracts 5% GST for many routes, and in some special import or export cases the rate can be nil.
- Transport of goods by air generally falls under the freight HSN code 9965 as well and is usually taxed at 18% GST.
- Certain goods transport services that do not fall in the above special entries may be taxed at 18% under the general rate for freight services.
At the same time, transport of some goods such as selected agricultural produce and a few essential items is exempt from GST even though the service still falls under the same freight HSN code. In those cases, the tax rate is treated as nil, but classification under 9965 is still important for reporting.
How HSN Codes for Freight Affect GST Filing?
In GST returns, taxpayers have to give a summary of sales and purchases with HSN wise details above certain turnover limits. If you use the correct freight HSN code 9965, the freight part of your income and expense gets reported under the right heading.
When you file GST returns , freight coded under 9965 also helps officers understand whether you are paying GST under forward charge or reverse charge for goods transport services. Wrong coding can create mismatches between your invoices, e invoices and returns.
Using the correct HSN code for freight charges also supports input tax credit claims. When freight is eligible for credit, it is easier to justify the claim if the invoices clearly show freight HSN code 9965, the GST rate and the amount of tax charged.
Conclusion
Freight is a critical cost for almost every product based business, and it always passes through GST in some form. The freight HSN code 9965 acts as the common classification for most goods transport services.
When you understand how to use the correct freight charges HSN code, along with the matching GST rate and charge mechanism, your billing becomes clear, your GST filing stays accurate and you reduce the risk of notices, interest and penalties linked to freight transactions.
