SAC Code for Transport and Freight Charges

There is no transport HSN code, strictly speaking. HSN classifies goods; transport is a service, so it is classified under the Service Accounting Code scheme instead — heading 9965 for goods transport services and heading 9967 for supporting services in transport. Everything else about freight billing follows from those two headings: which one your carrier falls into, whether the tax is paid by the transporter or by you, and whether a freight line on a sales invoice is a transport supply at all.

Why a transport HSN code is really a SAC code

Under GST, goods are classified with an HSN code drawn from the Harmonised System, and services are classified with a SAC drawn from the Scheme of Classification of Services. Both are six-digit codes in practice, and both are reported in the same column of an invoice and in the HSN summary of your GSTR-1, which is why they get talked about interchangeably. But they come from different lists. Every service SAC begins with 99, the chapter reserved for services, and no HSN does.

So when someone asks for the transport HSN code, what they want is the SAC for freight. Within Chapter 99 the codes narrow in steps: 9965 is the four-digit heading for goods transport services, 99651 is the group for land transport of goods, and 996511 is the six-digit service code for road transport of goods. Our SAC code list for services covers the wider scheme; this article stays inside transport, where the classification questions are unusually fiddly.

Heading 9965: goods transport services

Heading 9965 covers the actual carriage of goods, split by mode. Note that passenger transport is a different heading (9964) and postal and courier services are another one again (9968) — 9965 is freight only.

SAC	Covers
996511	Road transport of goods — trucks, trailers, refrigerated vehicles, containers, letters and parcels, live animals, household and office removals.
996512	Railway transport of goods, including bulk cargo, parcels and intermodal containers.
996513	Transport of petroleum and natural gas, water, sewerage and other goods by pipeline.
996519	Other land transport of goods not covered above.
996521	Coastal and transoceanic (overseas) water transport of goods — tankers, bulk carriers, refrigerated vessels.
996522	Inland water transport of goods.
996531	Air transport of goods, including letters and parcels carried by air.

For most Indian businesses the only two codes here that come up regularly are 996511 for road freight and 996512 for rail. Ocean and air codes matter mainly to importers, exporters and freight forwarders, and those transactions bring place-of-supply questions that go well beyond code selection.

Heading 9967: supporting services in transport

Heading 9967 is everything that surrounds the movement rather than the movement itself — handling, storage, clearing and forwarding, terminal operations. It is where a lot of logistics invoicing actually lands, because a third-party logistics provider is often selling coordination rather than a truck.

SAC	Covers
996711	Container handling services.
996712	Customs House Agent services.
996713	Clearing and forwarding services.
996719	Other cargo and baggage handling services.
996721	Refrigerated storage services.
996729	Other storage and warehousing services.
996791	Goods transport agency services for road transport.
996792	Goods transport agency services for other modes of transport.
996799	Other supporting transport services not elsewhere classified.

GTA, courier and rail are taxed differently

The single most common freight error is treating every transport bill the same way. Three categories that all look like "transport charges" in a ledger behave quite differently.

Goods transport agency

A GTA is defined by one thing: it issues a consignment note (or lorry receipt) for the goods it carries. That document is what makes the supplier a GTA rather than a plain truck owner, and it is what pulls the transaction into the reverse-charge and rate rules discussed below. If you receive a bill from a transporter with no consignment note behind it, check what you are actually buying before you decide how to tax it.

Courier agency

A courier agency is a separate category and is not a GTA. Couriers do not issue consignment notes, their services are not under reverse charge, and they charge GST on their invoice like any ordinary service provider. In accounts payable this is the easy case: the courier's tax invoice is a normal forward-charge document you claim credit against once it appears in your GSTR-2B.

Rail, air and ocean

Rail freight from Indian Railways, air cargo and ocean freight each run under their own entries in the rate notification, generally on forward charge with the carrier billing the tax. Import and export freight is the messiest corner of all — exemptions on outbound freight have been extended, allowed to lapse and revisited more than once, so any advice about export freight that is more than a year or two old should be re-verified rather than reused.

Rates and the with-ITC versus without-ITC choice

Goods transport by road that is supplied by anyone other than a GTA or a courier agency is exempt — the owner-driver who moves a load for you without issuing a consignment note is not charging GST at all. Where the supplier is a GTA, the rate notification offers a choice rather than a single number: a lower rate with no input tax credit on the GTA's own procurement, or a higher rate with full credit. The GTA elects; the recipient lives with the result.

That choice is a genuine trade-off and not a discount. Trucking is input-heavy — fuel outside GST, but tyres, spares, servicing, tolls, insurance and vehicle leasing all inside it — so a carrier taking the lower rate is absorbing tax on those inputs into its cost base. If you are the recipient and you are fully eligible for credit, the higher-with-credit option is often cheaper for you in net terms even though the headline rate looks worse. See the input tax credit rules for what makes credit eligible in the first place.

Forward charge or reverse charge: the GTA elects

GTA services are the textbook reverse-charge case. By default, where a GTA supplies road transport of goods to a specified recipient, the recipient pays the GST directly to the government instead of paying it to the transporter. The specified recipients are broadly the organised end of the economy: factories registered under the Factories Act, registered societies and co-operative societies, body corporates, partnership firms including associations of persons, casual taxable persons, and any person registered under GST — all located in the taxable territory.

The alternative is that the GTA opts to pay under forward charge. This is an election the transporter makes for a financial year by filing the prescribed declaration (Annexure V under the rate notification) with the jurisdictional authority before the start of that year, with a corresponding annexure to revert to reverse charge later. A GTA that has opted for forward charge charges GST on its invoice in the usual way, and the recipient must not also pay it under RCM.

Situation	Who pays the GST	What the recipient does
GTA, no forward-charge election	Recipient, under RCM	Pays the tax in cash, then claims credit if otherwise eligible.
GTA that has elected forward charge	Supplier	Pays the invoice inclusive of GST; claims credit against the invoice. No RCM entry.
Transporter who is not a GTA	Nobody — exempt	No GST, no RCM, no credit.
Courier agency	Supplier	Normal forward charge; credit against the courier's tax invoice.

Practically, that table is why the transporter's invoice needs reading rather than skimming. A GTA on forward charge should say so on the invoice — many include an explicit declaration that they have opted to pay under forward charge. If the invoice charges GST and you also self-assess RCM on it, you have paid twice and one of those payments is very hard to recover. The mechanics of paying, self-invoicing and claiming credit are set out in our guide to the reverse charge mechanism under GST — including the point that RCM liability must be discharged in cash and cannot be set off against an existing credit balance.

Whether a supplier is registered at all is also part of this decision, and it is the part you can check in seconds rather than infer from a PDF. A GSTIN lookup tells you the registration status, the legal name and the taxpayer type behind a transporter's number before you decide how to treat their bill.

Freight charged on the same invoice as the goods

This is the question that generates the most confused invoices: you sell goods, you deliver them, and you want to recover the delivery cost. Do you add a freight line at a transport SAC?

Usually no. Where the transport is naturally bundled with the supply of goods and supplied together with them in the ordinary course of business, the two together are a composite supply. The goods are the principal supply, the transport is ancillary, and the whole supply is taxed at the rate applicable to the goods. Reinforcing this, incidental expenses charged by the supplier to the recipient — freight included — form part of the value of supply under the valuation provisions of the CGST Act. So the freight recovery carries the goods HSN and the goods rate, even where you show it as a separate line for transparency.

The consequences are worth spelling out, because they cut both ways:

• If you sell goods taxed at 5% and add freight, that freight is charged at 5% as part of the composite supply — not at the transport service rate.
• If you sell goods taxed at 18%, the freight recovery goes at 18%. Billing it lower "because transport is cheaper" understates your output tax.
• Where a single invoice carries goods at different rates and one freight recovery, the freight has to be apportioned across those lines rather than parked against whichever rate is convenient.
• The GTA who actually moved the goods still bills you separately, and that leg is taxed on its own merits — commonly under RCM in your hands. The freight you recover from your customer and the freight you pay to the carrier are two different supplies.

The picture changes if the buyer contracts the transporter directly on ex-works terms. Then there is no freight on your sales invoice at all; the transporter bills the buyer, and any reverse-charge liability sits with the buyer. A third route exists where the seller pays freight purely on the buyer's behalf and recovers it at cost as a pure agent, which keeps it out of the value of supply — but the pure-agent conditions are strict and worth checking properly before relying on them.

One thing composite-supply treatment does not change: the movement still needs its documentation. Delivery of goods above the notified consignment value requires an e-way bill regardless of how the freight is billed — see the e-way bill rules and limits.

Exempt transport, and what stopped being exempt

A number of transport supplies sit outside GST entirely. The important ones for goods movement are transport of goods by road other than by a GTA or a courier agency, and transport of specified commodities by a GTA — historically covering categories such as agricultural produce, milk, salt, food grain including flour and pulses, organic manure, newspapers and magazines registered with the Registrar of Newspapers, relief material for disaster-affected areas, and defence or military equipment.

Two long-standing small-consignment exemptions — the ones based on a low value for a single carriage and a low value for goods delivered to a single consignee — were withdrawn in July 2022. Plenty of circulating advice still quotes them. If your accounting policy currently says small freight bills are exempt below some rupee figure, that policy is out of date and is probably understating your RCM liability on exactly the high-volume, low-value bills nobody reviews.

Exemption lists are amended more often than rate entries, which is why this article names categories rather than reproducing the notification. Check the current exemption notification for services on cbic-gst.gov.in before you classify a recurring freight stream as exempt, and re-check it when your auditor asks rather than assuming last year's position still holds.

Frequently asked questions

What is the HSN code for transport charges?

Transport is a service, so it carries a SAC rather than an HSN. Goods transport sits under heading 9965 and supporting services in transport under heading 9967, both within Chapter 99. Road transport of goods is commonly reported as 996511, and goods transport agency services for road transport as 996791.

What is the SAC code for freight charges on an invoice?

It depends on who is supplying the freight. If a transporter bills you for carriage, the transporter reports it under 9965 or 9967. If a seller adds a freight line to the invoice for the goods themselves, that freight is usually part of a composite supply and takes the HSN and rate of the goods, not a separate transport SAC.

What is the GST rate on goods transport by road?

A goods transport agency generally has a choice between a lower rate without input tax credit and a higher rate with full credit. Transport of goods by road by anyone other than a GTA or a courier agency is exempt. Confirm the current percentages against the rate notification on cbic-gst.gov.in before you invoice.

Is GST on transport under reverse charge?

GTA services are under reverse charge by default for specified recipients, including body corporates, registered partnership firms, factories, societies and any person registered under GST. The GTA can instead elect to pay under forward charge by filing the prescribed annual declaration, in which case the recipient pays nothing under RCM.

Is a courier company a goods transport agency?

No. A courier agency is a distinct category and is not a GTA, so it does not issue a consignment note and its services are not under reverse charge. Courier invoices carry GST charged in the normal forward-charge way, and the recipient claims credit against the courier tax invoice.

Do I need to show a separate SAC for the freight line on my sales invoice?

Usually not. Where you sell goods and arrange delivery as an ancillary part of the same supply, freight is an incidental expense included in the value of that supply, so the invoice line takes the goods HSN and the goods rate. Only bill freight under a transport SAC when you are genuinely supplying a separate transport service.