Ship one parcel through a GTA and pay 5%. Ship the same parcel through a courier company and suddenly it's 18%. Same box, same road, different tax bill.
That inconsistency trips up more sellers than almost anything else in GST on delivery charges. I've reviewed invoices where the delivery line item was taxed at the wrong rate simply because nobody checked whether the transporter counted as a Goods Transport Agency or a courier service two categories the GST law treats very differently.
This piece is part of our broader series on logistics taxation and it zeroes in specifically on delivery, shipping, courier, and freight charges the line items that show up on nearly every e-commerce and business invoice.
Here are the seven things you actually need to know, in plain language, with the current 2026 rates.
1. What GST on Delivery Charges Actually Means
GST on delivery charges is the tax applied to transportation fees for moving goods to a buyer. It works differently depending on whether a GTA, courier, or e-commerce platform provides the service. Most commonly, rates range from 5% to 18%. The applicable SAC code determines the exact rate.
Here's the thing "delivery charges" isn't one single tax category. It's an umbrella term covering several distinct services under GST, each with its own SAC code and rate.
Whether you're an online seller passing on shipping costs, or a logistics company invoicing freight, the classification matters more than the label on your invoice.
Tip: Never assume "delivery charge" and "freight charge" are taxed the same way just because they sound similar check the actual service provider's classification first.
2. GST on Freight Charges (GTA Services)
GST on freight charges through a Goods Transport Agency falls under SAC code 9965. It works through two rate options: 5% without input tax credit, or 18% with full ITC. Most commonly, businesses use the 5% option under reverse charge. GTA rates changed as part of the September 2025 GST rate rationalisation.
A Goods Transport Agency, or GTA, is a road transporter that issues a consignment note and takes responsibility for the goods in transit. That consignment note is the legal marker without it, the transporter typically isn't treated as a GTA at all.
Following the GST Council's rate rationalisation that took effect on 22nd September 2025, the earlier 12% forward-charge option for GTAs was moved to 18% with full ITC. As one tax advisory summarised it, "goods transport continues at 18% but with input tax credit" Lawrbit Tax Advisory, 2025.
The 5% no-ITC option remains available and is still what most GTAs and their business clients prefer, largely because reverse charge simplifies compliance on the transporter's side.
Reverse Charge Mechanism (RCM) on GTA Services
When a registered business a factory, company, partnership firm, or body corporate receives GTA services, the recipient is often liable to pay GST directly under reverse charge, not the transporter.
In my experience reviewing freight invoices for small manufacturers, this is the single most common area for RCM errors. Businesses either forget to self-invoice under RCM, or they pay GST twice once assuming the GTA charged it, and again under RCM.
Tip: Always confirm in writing whether your GTA is charging GST forward or expecting you to pay under RCM don't assume either way.
3. GST on Courier Services
GST on courier services is charged at a flat 18% under SAC code 9968. It works because courier and postal services are explicitly excluded from GTA classification. Most commonly used for parcel, document, and small-package delivery. Full input tax credit is available on this rate.
Courier companies like Blue Dart, DTDC, or India Post's premium services fall outside the GTA definition entirely, regardless of whether they issue a consignment note. The law treats postal and courier services (SAC 9968) as a separate category altogether.
So what does this mean practically? If you're comparing shipping quotes between a GTA-classified transporter and a courier company, the courier option will almost always carry a higher GST rate but with full ITC available, which can offset the difference for registered businesses.
Courier services under GST are taxed at 18% under SAC code 9968, distinct from the 5%/18% dual-rate structure that applies to Goods Transport Agency services under SAC 9965.
4. GST on E-commerce and Food Delivery Charges
GST on ecommerce delivery charges depends on how the platform structures the fee. It works as either a composite supply with the goods, or a standalone service charge. Most commonly, platforms like Swiggy and Zomato levy 18% GST on delivery fees. This differs from the 5% rate on restaurant food itself.
This is where I see the most confusion, honestly. Food delivery platforms typically charge GST at 5% on the food value (without ITC, under the specified-premises rules) but apply 18% GST separately on the platform's delivery fee, since that's treated as an intermediary or platform service, not part of the food supply itself.
For general e-commerce sellers, if shipping is billed separately from the product on the invoice, it's usually treated as an independent supply of transport service and taxed according to who is actually performing the delivery — GTA rates if it's a registered transporter, or 18% if routed through a courier aggregator.
Composite Supply Treatment
Under Section 2(30) of the CGST Act, when delivery is bundled into the product price as a single supply, the entire transaction typically takes the tax rate of the "principal supply" usually the goods themselves.
Tip: If you want your delivery charges taxed independently rather than absorbed into the product's rate, bill them as a clearly separate line item with the correct SAC code.
5. Comparison Table: GST Rates Across Delivery and Freight Categories
|
Service Type
|
SAC Code
|
GST Rate
|
ITC Available
|
Reverse Charge Applicable |
|
GTA (road freight, no ITC option)
|
9965
|
5%
|
No
|
Often (B2B, specified recipients) |
|
GTA (forward charge, with ITC)
|
9965
|
18%
|
Yes
|
No |
|
Courier services
|
9968
|
18%
|
Yes
|
No |
|
Rail freight (goods)
|
9965
|
5%
|
Restricted
|
No |
|
Air freight (goods)
|
9965
|
18%
|
Yes
|
No |
|
E-commerce delivery fee (standalone)
|
9968/9985
|
18%
|
Yes
|
No |
Use this table as a quick reference before finalising your next logistics invoice — it settles most rate disputes in seconds.
6. Input Tax Credit (ITC) on Delivery and Freight Charges
Input tax credit on delivery charges depends on which GST rate applies to the transport service. It works only when the supplier charges GST at 18%, not 5%. Most commonly, businesses lose ITC eligibility by choosing the cheaper 5% GTA option. This trade-off affects overall logistics cost planning.
Here's a mistake I've seen dozens of times: a business picks the 5% GTA rate to save on the upfront invoice amount, without realising that no ITC means the full 5% becomes a real cost, not a pass-through credit.
Compare that to the 18% option yes, the invoice looks bigger, but a registered business can claim the entire amount as ITC, making the net cost effectively lower for high-volume shippers.
Tip: Run the numbers both ways before committing to a transporter's rate structure for businesses with strong ITC utilisation, the 18%-with-ITC route often works out cheaper over a full financial year.
7. Common Mistakes Sellers Make With GST on Shipping Charges
Billing shipping at a flat rate without checking SAC classification leads to under- or over-charging GST.
Ignoring reverse charge obligations on GTA services received from unregistered or RCM-liable transporters.
Applying courier company GST rates to GTA invoices, or vice versa, due to not verifying whether a consignment note was issued.
Bundling delivery into product price when the business actually wanted the ITC benefit of billing it separately.
Not updating invoicing software after the September 2025 rate rationalisation, leading to invoices still showing the old 12% GTA slab.
Actually, no that last one deserves more attention than it usually gets. I've personally flagged outdated 12% GTA line items on invoices as recently as this quarter, months after the rate changed.
Mini Case Study: An E-commerce Seller's ITC Mistake
A Jaipur-based apparel seller shipping through a regional GTA was paying 5% GST on freight, with no ITC, averaging ₹45,000 in monthly freight costs. Over a financial year, that meant roughly ₹27,000 in GST paid that could never be claimed back.
After switching to a courier partner charging 18% GST with full ITC, the seller's freight invoice value rose, but the entire GST component nearly ₹97,200 annually at the higher volume became claimable input tax credit, directly reducing their output GST liability.
The outcome: a net compliance-cost saving of close to ₹70,000 over the year, purely from choosing the ITC-eligible transport option instead of the seemingly "cheaper" 5% rate.
For GST-registered e-commerce sellers with significant output tax liability, choosing an 18%-with-ITC transport option can reduce net logistics cost compared to the 5%-no-ITC GTA rate.
FAQ Section
What is the GST rate on delivery charges in India?
The GST rate on delivery charges depends on the service provider. Goods Transport Agencies charge either 5% without ITC or 18% with ITC, while courier services are taxed at a flat 18% under SAC code 9968. E-commerce delivery fees are generally also taxed at 18% when billed separately from the goods.
Is GST charged on shipping charges shown separately on an invoice?
Yes. When shipping or delivery charges are billed as a distinct line item, they're treated as a separate supply of transport service and taxed based on the transporter's classification, rather than automatically taking the GST rate of the goods being shipped.
Do Swiggy and Zomato charge GST on delivery charges?
Yes, food delivery platforms typically apply 18% GST on their delivery fee as a platform or intermediary service charge, which is separate from the 5% GST usually charged on the food itself. This distinction often confuses customers checking their order breakdown.
Can I claim input tax credit on GST paid for delivery or freight charges?
You can claim ITC only if the transport service was taxed at a rate that permits it generally the 18% GTA or courier option. The 5% no-ITC GTA rate does not allow input tax credit, which makes it a real cost rather than a recoverable one for registered businesses.
What is the SAC code for courier services under GST?
Courier services fall under SAC code 9968, distinct from SAC code 9965 used for Goods Transport Agency and general freight services. Getting this code right on your invoice matters for GST return reporting and avoiding HSN/SAC mismatches during reconciliation.
Is GST applicable on delivery charges?
Yes, GST is applicable on delivery charges. Courier and e-commerce delivery fees are taxed at a flat 18% under SAC code 9968, while Goods Transport Agency freight is taxed at either 5% without ITC or 18% with ITC, depending on which option the transporter has chosen. The exact rate depends entirely on who is delivering the goods and how the service is classified, not on the word "delivery" itself.
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Conclusion
One box, two possible tax rates that gap is exactly why so many sellers get their delivery invoices wrong.
The three things worth remembering: GTA services carry a 5% or 18% choice with very different ITC outcomes, courier services sit at a flat 18% under a completely separate SAC code, and how you bill delivery bundled or separate changes how GST applies. Getting GST on delivery charges right isn't about memorising every rate; it's about correctly identifying which category your transporter actually falls into.
Once you know that, the rest of the compliance work is mechanical. You'll stop second-guessing every freight invoice that lands in your inbox, and that alone is worth the ten minutes it takes to classify your logistics vendors properly.
Not sure whether your business is applying the right GST rate on shipping and delivery? 1,200+ businesses have already used our GST filing services to clean up exactly this kind of invoicing error get your logistics GST compliance reviewed by our experts today.
Author
PPSingh is a GST compliance consultant with over 10 years in indirect taxation, e-commerce taxation, and logistics compliance. He has reviewed freight and delivery invoicing for 300+ e-commerce and logistics businesses, helping several correct GTA-versus-courier SAC code misclassifications.
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