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.
What Is the Freight HSN Code?
In GST, every good and service is grouped under a code called HSN code. For services, the same system is used through service accounting codes under chapter 99.
Freight charges for moving goods are covered under the service HSN code 9965. This code stands for goods transport services and is widely used as the freight HSN code in India.
The structure of 9965 can be understood in a simple way. The first two digits 99 represent services in general. The next two digits 65 show that the service relates to the transport of goods. More detailed sub codes can be used for different modes such as road, rail, sea or air but all of them sit under the main freight HSN code 9965.
On your freight invoice, you may either show the broad code 9965 or a more detailed six digit or eight digit code as per your software and reporting needs. In both cases GST authorities recognise it as the correct classification for freight charges.
| HSN Code | Product Description | Product Type or Variant | GST Rate |
|---|---|---|---|
| 9965 | Goods transport services | General freight and goods transport services | 5% / 12% / 18% |
| 996511 | Road transport of goods | Goods transport agency (GTA) and other road freight services | 5% (no ITC) / 12% (with ITC) |
| 996512 | Rail transport of goods | Freight services by rail for most goods | 5% |
| 996513 | Water transport of goods | Freight by vessel or coastal shipping for goods | 5% |
| 996514 | Air transport of goods | Air freight services for goods | 18% |
| 996519 | Other goods transport services | Other freight services not covered above, including multimodal | 18% |
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.
Hi there! I’m a Chartered Accountant with over 20 years of experience in financial accounting and a passion for writing. I enjoy simplifying complex topics like GST and income tax, believing that learning should be a lifelong journey. I'm here to share insights and make financial matters easier for everyone!
Frequently Asked Questions
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What is the HSN code for freight charges in India?
For most freight charges related to the movement of goods, the HSN code in India is 9965. This service code covers goods transport services such as road, rail, air, sea and pipeline and is commonly used as the freight HSN code in GST invoices.
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How does the HSN code for freight affect GST filing?
The freight HSN code decides under which heading your transport income and expense will appear in GST returns. When you use 9965 correctly on all freight invoices, it becomes easier to fill HSN wise summaries, identify reverse charge entries and support input tax credit claims during GST filing.
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What is the GST rate for freight charges under HSN code?
There is no single fixed GST rate for all freight charges under 9965. Goods transport by a transport agency can be taxed at 5% without credit or 12% with credit. Rail and many sea journeys are often taxed at 5%, while some general freight and air transport is taxed at 18%. You should always check the latest GST notification for your exact case.
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Are outward freight and inward freight classified under the same HSN code?
Yes, both outward freight and inward freight are usually classified under the same freight HSN code 9965 because both relate to goods transport services. What can change is who is the service provider, who is the recipient and whether GST is paid under forward charge or reverse charge.
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How do businesses use the freight HSN code for tax compliance?
Businesses use the freight HSN code on every freight invoice, in their accounting masters and in GST returns. By mapping all freight charges to code 9965, they can apply the right GST rate, decide who should pay tax, claim eligible input tax credit and avoid disputes during scrutiny and audit.