Transportation HSN Code (SAC 9965)

Transport is one of the few areas of GST where almost every business gets a question wrong at least once. Is the code 9965 or 9967? Is the rate 5% or 18%? Who pays — the transporter or the recipient? And what happens when a seller simply adds "freight" as a line on a goods invoice?

This guide answers all of it. It explains the transportation HSN code, the correct SAC classification for road, rail, air and sea transport, the 2026 GST rates, when reverse charge applies, and how to bill transport charges without triggering an ITC dispute.

It is written for transporters and goods transport agencies, manufacturers and traders who pay freight, e-commerce and logistics operators, and accountants filing GST returns for any of them.

Transport of goods is classified under SAC 9965. Road transport by a Goods Transport Agency is taxed at 5% without ITC or, at the GTA's option, 18% with ITC.

What is the Transportation HSN Code?

For services, GST uses the SAC — Services Accounting Code — which follows the same structure as HSN and is commonly (if loosely) called the "HSN code for services". All service codes begin with 99.

Heading 9965 — Goods Transport Services covers the movement of goods by any mode:

A closely related heading is 9967 — Supporting services in transport, which covers cargo handling, warehousing linked to transport, and the services of freight forwarders and clearing agents. And 9964 covers passenger transport, which is a different service altogether.

A common point of confusion: many Goods Transport Agencies raise invoices under 996791 (goods transport agency services, under 9967) while others use 996511. Both are seen in practice; what matters more for tax purposes is that the service is correctly identified as a GTA service and taxed accordingly. Where you need a definitive lookup for a specific service, use the HSN Code Finder.

Why the Transportation HSN Code Matters

1. It decides the rate. Passenger transport, goods transport and supporting logistics services carry different rates. Pick the wrong heading and you charge the wrong tax.

2. It decides who pays. GTA services are one of the largest reverse-charge categories in GST. If the service is classified as GTA and supplied to a specified recipient, the recipient pays the tax — not the transporter.

3. It affects your input tax credit. A GTA charging 5% cannot pass on ITC on its own inputs; a GTA opting for 18% can. Recipients who care about credit often prefer the 18% option.

4. Freight added to a goods invoice is not a separate service. If a seller delivers goods and charges freight on the same invoice, that freight is part of a composite supply and is taxed at the goods rate — not at 5%.

5. E-way bills depend on it. Transport documents, vehicle numbers and transporter IDs are all tied to the movement being correctly described.

GST Rates on Transportation Services (2026)

Important 2026 note: The rate rationalisation effective 22 September 2025 kept transport of goods in the 5% slab while restructuring the wider rate schedule. The 5%-without-ITC / 18%-with-ITC choice for GTAs continues.

Key Conditions and Eligibility

Requirement 1: The transporter must be a GTA to attract the 5% GTA rate

A Goods Transport Agency is a person who provides road transport of goods and issues a consignment note (or lorry receipt / bilty). No consignment note means no GTA — and transport of goods by road by anyone other than a GTA or a courier agency is exempt from GST. This single test resolves most transport GST disputes.

Requirement 2: The recipient must be a "specified person" for RCM to apply

Reverse charge on GTA services applies where the recipient is a registered factory, society, co-operative society, registered person under GST, body corporate, partnership firm (including AOP), or casual taxable person. Where the recipient is an unregistered individual, RCM does not apply.

Requirement 3: The GTA must exercise the forward-charge option in time

A GTA that wants to charge 18% with ITC must file the prescribed declaration (Annexure V) for the financial year, generally on or before 15 March of the preceding financial year, and must state on the invoice that it is paying tax under forward charge. Once exercised, the option applies for the whole year.

Requirement 4: Exempt consignments must be identified correctly

Transport of the following goods by a GTA is exempt: agricultural produce, milk, salt, food grains including flour, pulses and rice, organic manure, newspapers or magazines registered with the Registrar of Newspapers, relief material for disaster-affected areas, and defence or military equipment. Also exempt: a single consignment charged at ₹1,500 or less, and a single consignee's goods where the total charge is ₹750 or less.

How Transportation GST Works: Step by Step

Step 1: Identify the mode and the supplier

Road, rail, air or sea. For road, ask the decisive question: does the transporter issue a consignment note?

Step 2: Decide whether it is exempt

An individual truck owner moving your goods without a consignment note is not a GTA — the service is exempt and no GST applies. Small consignments below the ₹1,500 / ₹750 thresholds are also exempt.

Step 3: Determine forward charge or reverse charge

If the GTA has opted for forward charge, it charges 18% (or 5% under the no-ITC option where it bills forward) on its invoice. If it has not, and you are a specified recipient, you pay 5% under reverse charge.

Step 4: Pay and report the tax correctly

Under RCM, the recipient pays the tax in cash — it cannot be set off against existing input tax credit — and reports it in Table 3.1(d) of GSTR-3B.

Step 5: Claim input tax credit on the RCM paid

Once the RCM liability is discharged, the recipient can claim it as input tax credit in the same GSTR-3B, provided the freight relates to a taxable business supply. In practice this makes GTA reverse charge cash-flow neutral for most registered businesses.

Worked example: A Ludhiana manufacturer pays ₹40,000 to a GTA for moving finished goods to Delhi. The GTA has not opted for forward charge.

• The GTA's invoice shows ₹40,000 with the note "GST payable by recipient under RCM"
• The manufacturer pays IGST @ 5% = ₹2,000 in cash, reported in Table 3.1(d) of GSTR-3B
• The manufacturer claims ₹2,000 as ITC in Table 4(A)(3) of the same return
• Net cost: ₹40,000

Documents Required

• Consignment note / lorry receipt (LR) — the document that makes a road transporter a GTA. It must carry a serial number, consignor and consignee details, origin and destination, and who is liable to pay the tax.
• Tax invoice from the GTA — with SAC, value, and a clear statement of whether tax is under forward or reverse charge.
• Annexure V declaration — where the GTA has opted for forward charge.
• E-way bill — required for consignments above ₹50,000 in value, carrying transporter ID and vehicle number.
• Self-invoice and payment voucher — required from the recipient where the supplier is unregistered and RCM applies.
• Proof of exemption — where the goods transported fall in the exempt list, keep documentation of what was carried.

Benefits of Getting Transportation GST Right

1. Reverse charge becomes cash-flow neutral

Businesses that pay RCM correctly and claim the credit in the same month bear no real tax cost on freight. Businesses that skip RCM face interest and penalty later — with no credit relief for the interest.

2. Fewer ITC reversals for your customers

If you bill freight on a goods invoice at the wrong rate, your customer's ITC is exposed. Composite-supply treatment — freight taxed at the goods rate — protects both sides.

3. A defensible position in audit

Departmental audits routinely test freight ledgers against RCM paid in GSTR-3B. A clean, reconciled freight ledger closes that line of enquiry quickly.

4. Better commercial choices between 5% and 18% GTAs

A GTA with heavy input costs — fuel, tyres, vehicle purchases — is often better off under 18% with ITC. A small operator with few taxable inputs is usually better off at 5%. Understanding the codes lets you negotiate this consciously.

5. Smoother goods movement

The e-way bill and the transport document must agree. Consistent classification means fewer detentions and less time lost at check posts.

Transportation SAC 9965 vs Supporting Services SAC 9967

Frequently Asked Questions

What is the HSN code for transportation? Transport of goods is classified under SAC 9965, with 996511 for road, 996512 for rail, 996521 for water and 996531 for air.

What is the transport charges HSN code? Standalone transport charges are billed under 9965 (or 996791 for GTA services under heading 9967). Freight billed on a goods invoice takes the goods' HSN and rate instead.

Is GST on transportation 5% or 18%? Road transport by a GTA is 5% without ITC by default, or 18% with ITC if the GTA has opted for forward charge. Air transport of goods is 18%.

Who pays GST on GTA services? Usually the recipient, under reverse charge, if the recipient is a registered person, body corporate, factory, society or partnership firm — unless the GTA has opted for forward charge.

Is transport of goods by road exempt from GST? Yes, when the transporter is neither a goods transport agency nor a courier agency — that is, when no consignment note is issued.

Can I claim ITC on freight paid under reverse charge? Yes, provided the freight relates to taxable business supplies. Pay the RCM in cash first, then claim it as credit in the same GSTR-3B.

What is 9965 HSN code? It is the SAC heading for goods transport services across all modes — road, rail, pipeline, water, air and space.

Is there GST on transport of agricultural produce? No. Transport of agricultural produce, milk, salt, food grains, pulses, rice and flour by a GTA is exempt.

What is the GST rate on courier charges? Courier services fall under 996812 and attract 18%. Courier agencies are excluded from the road-transport exemption.

Do I need an e-way bill for every consignment? An e-way bill is generally required where the consignment value exceeds ₹50,000, subject to state-specific rules for intra-state movement.

Conclusion

Transport of goods is coded under SAC 9965, taxed at 5% without ITC or 18% with ITC for road transport by a GTA, and very often payable by the recipient under reverse charge. The three questions that resolve nearly every transport GST doubt are: Is there a consignment note? Has the GTA opted for forward charge? Is the freight standalone or part of a goods supply?

Next step: Reconcile your freight ledger against the RCM reported in Table 3.1(d) of your GSTR-3B for the current year, and use the HSN Code Finder to confirm the SAC on every transport invoice you receive.