On this page · 9 sections
- What does the law say?
- What GST rate applies to packing and freight charges?
- Is there an HSN or SAC code for packing charges, freight charges or discount?
- How to show packing and freight on a GST invoice
- What if one bill has items at different GST rates?
- When should you check with your CA?
- How RichPOS handles extra charges and discounts
- Frequently asked questions
- Bottom line
Updated 17 October 2026 · By Ashok Sachdev · Sources: Sections 2(30), 8 and 15 of the CGST Act (CBIC)
Quick answer
When a shop charges packing, delivery or freight to the customer on the same invoice as the goods, those charges are part of the value of the goods under Section 15(2)(c) of the CGST Act and are taxed at the same GST rate as the goods. They do not need a separate HSN or SAC code; add them to the taxable value of the item line, or show them as a line taxed at the goods' rate.
Shop owners often ask what HSN code to use for "packing charges" or "freight charges" on a bill, and whether to charge 18% on them. For a normal retail or wholesale sale, the answer is simpler than it looks: GST law treats goods sold with packing and delivery as one supply. This guide explains the rule, shows how to put the charges on a GST invoice, and covers the cases where you should ask your CA.
What does the law say?
| Provision | What it says | What it means for your bill |
|---|
| Section 15(2)(c) | The value of supply includes incidental expenses, including commission and packing, charged by the supplier to the recipient, and anything done by the supplier at the time of or before delivery | Packing and delivery charged by you are added to the taxable value |
| Section 2(30), illustration | Goods packed and transported with insurance are a composite supply, and the supply of goods is the principal supply | Goods + packing + transport + insurance on one sale = one composite supply |
| Section 8(a) | A composite supply is treated as a supply of its principal supply | The charges take the GST rate of the goods, not a separate service rate |
| Section 15(3)(a) | The value does not include a discount given before or at the time of supply if it is recorded on the invoice | A discount on the bill reduces the taxable value; it is not a separate line with its own HSN |
What GST rate applies to packing and freight charges?
The rate of the goods they go with. If you sell a ₹10,000 steel almirah at 18% and charge ₹500 for delivery on the same bill, the ₹500 is taxed at 18%. If you sell ₹10,000 of steel utensils at 5% with ₹500 packing and delivery, the ₹500 is taxed at 5%. Charging 18% on freight "because it is a service" is a common mistake that overcharges the customer on low-rate goods.
Is there an HSN or SAC code for packing charges, freight charges or discount?
Not on a normal sale of goods. Because packing and delivery charged by the seller are part of the goods' value, they carry the goods' HSN. A discount recorded on the invoice simply reduces the taxable value, so it has no HSN or SAC of its own. SAC codes for transport or packing services apply when those services are supplied on their own, for example by a transporter or a packing contractor, not when a shop adds them to its own sale.
How to show packing and freight on a GST invoice
Two common ways, both correct when the rate matches the goods:
Option 1: add the charge to the item's taxable value
| Item | HSN | Taxable value | Rate | CGST | SGST | Total |
|---|
| Steel almirah (incl. packing and delivery ₹500) | 9403 | ₹10,500.00 | 18% | ₹945.00 | ₹945.00 | ₹12,390.00 |
Option 2: show the charge as its own line at the goods' rate
| Item | HSN | Taxable value | Rate | CGST | SGST | Total |
|---|
| Steel almirah | 9403 | ₹10,000.00 | 18% | ₹900.00 | ₹900.00 | ₹11,800.00 |
| Packing and delivery | 9403 | ₹500.00 | 18% | ₹45.00 | ₹45.00 | ₹590.00 |
| Total | | ₹10,500.00 | | ₹945.00 | ₹945.00 | ₹12,390.00 |
Option 2 is clearer for the customer and shows exactly what the delivery cost. The GST is the same either way. Check figures with the GST calculator.
What if one bill has items at different GST rates?
Say one bill has a 5% item and an 18% item and one delivery charge. The Act does not spell out how to split a single delivery charge across items with different rates. A common approach is to share it between the items in proportion to their value and tax each part at that item's rate. Agree the method with your CA and use it every time.
| Line | Value | Share of ₹300 delivery | Rate | GST |
|---|
| Steel utensils | ₹2,000 | ₹100 | 5% | ₹105.00 (on ₹2,100) |
| Plastic buckets | ₹4,000 | ₹200 | 18% | ₹756.00 (on ₹4,200) |
The figures are illustrative. Item rates are on the HSN and GST rate list, and hardware items in particular are in GST on cement and hardware.
When should you check with your CA?
- Delivery billed separately under its own contract or invoice, or by a separate business: the transport may then be its own supply with its own rules.
- Delivery through a goods transport agency (GTA) that issues a consignment note: reverse charge rules can apply to the person paying freight.
- Free delivery that you pay a transporter for: the cost is yours; whether you can claim input tax credit on the transporter's bill depends on how they charge GST.
- Inter-state delivery of goods above the e-way bill limit: see the e-way bill guide.
How RichPOS handles extra charges and discounts
- GST on each bill is worked out after bill discounts, so the discount reduces taxable value as Section 15(3)(a) expects. See GST on discounts.
- The HSN and rate saved on each item print in the HSN column of A4 GST invoices.
- GST reports by HSN and the GSTR-1 sales report export to Excel, CSV or PDF for your CA.
To set up delivery or packing charges at the goods' rate in RichPOS, ask our team on WhatsApp to set it up during your free trial.
Bottom line
Packing, freight and delivery that you charge with your goods take the goods' rate and HSN; a discount on the bill lowers the taxable value. Keep it consistent, and ask your CA only for separate transport contracts, GTA freight and inter-state movement. Try GST billing with your own items in the RichPOS free trial or see pricing.
FAQ
Frequently asked questions
What is the GST rate on packing charges?
When the seller charges packing on the same invoice as the goods, packing is part of the value of the goods under Section 15(2)(c) of the CGST Act and is taxed at the goods' GST rate. There is no separate rate for packing on a normal sale.
What is the HSN code for freight charges on an invoice?
On a sale where the seller delivers the goods and charges freight on the same invoice, freight is part of a composite supply with the goods as principal supply (Sections 2(30) and 8). It takes the HSN and rate of the goods. A SAC code for transport applies when transport is supplied on its own.
Is GST charged on delivery charges?
Yes. Delivery charged by the seller to the buyer is included in the taxable value and taxed at the rate of the goods delivered. If delivery is billed separately under a different contract, check the treatment with your CA.
Is there an HSN code for discount on sales?
No. A discount given before or at the time of sale and recorded on the invoice reduces the taxable value under Section 15(3)(a). It is not a separate supply, so it has no HSN or SAC code.
Should packing and freight be shown as a separate line on a GST invoice?
Either way is fine. You can add the charge to the item's taxable value or show it as a separate line taxed at the goods' rate. A separate line is clearer for the customer. The GST works out the same.
Need a quick figure? Use the free GST calculator to add or remove GST.
ASWritten by Ashok SachdevFounder, RichPOS Software, Ahmedabad. We build RichPOS for Indian shops and write these guides from what shop owners ask us every day. Facts on tax rates and prices are dated; confirm GST matters with your CA. Questions? WhatsApp us.
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