Freight Charges HSN Code: A Complete Guide
- Nimisha Panda
- 7 days ago
- 8 min read
Vehicle transportation is the most popular way to move goods in India. According to estimates from the National Highways Authority of India, 65% of freight HSN codes and 80% of passenger traffic transit on highways. Products are transported by road by a courier service or carrier. According to Notification No. 11/2017-Central Tax (Rate), which was published on June 28, 2017, "goods transport agency," or GTA, covers any individual. It is regardless of name, that offers services associated with the delivery of goods by road and issues dispatch notes. This shows that only companies who issue consignment notes are considered to be goods transport agents. It is even though other parties may also rent cars for the delivery of products. As a result, a consignment note is required in order to be referred to as a goods transit agency. In this article, we will give a detailed overview of the HSN code of freight charges.
Table of Contents
What is the HSN Code?
Being familiar with the HSN codes that apply to your company is crucial if you are a small business handling freight charges. An HSN code is a set of numeric or alphanumeric codes associated with a certain product. Each code corresponds to a certain product, category, or subdivision. The longer the code, the more detailed and accurate the classification. The HSN codes are arranged hierarchically.
Importance of HSN Code in Invoice
Freight charges must be correctly classified under the relevant HSN code for a number of reasons.
Compliance with GST: For GST compliance in India, a valid HSN code must be identified and mentioned. The HSN code establishes the GST rate that is applicable to any given commodity or service. There could be penalties as well as fees for inaccurate taxation brought on by incorrect coding.
Legal Obligation: Using HSN codes on invoices is required by the Indian tax authorities. If the HSN codes are not provided or are provided incorrectly, there may be monetary fines and legal consequences.
Overcoming the Possibility of Over-Taxation or Under-Taxation: Proper classification of HSN codes prevents over-taxation or under-taxation of goods and services. Applying the correct GST rate is ensured by using the relevant code. This results in accurate tax computations.
Customs Procedures: The HSN code is used by Indian customs officials to determine import or export charges when items are imported or exported. Proper coding lowers the possibility of delays or disputes and streamlines customs operations.
Maintaining Records and Auditing: Correctly reporting HSN codes is crucial for both of these processes. It ensures that businesses can provide accurate and trustworthy records of their financial activities when required.
Use of HSN Code for Freight
There are a variety of methods to utilise the HSN Code for freight charges, such as:
Specific Requirements: Imported and exported commodities are subject to customs duties. The customs taxes that are applicable to the freight costs are calculated by the HSN Code of Freight costs.
Goods and Services Tax: In India, the delivery of goods and services is subject to a tax known as the Goods and Services Tax, or GST. The HSN Code of Freight Charges establishes the GST that needs to be applied to the freight charges.
Documentation: The HSN Code of Freight Charges is used to categorise and record the freight charges in a variety of documents, including bills of lading and invoices.
Type of Transportation Considered as Freight
"Freight" refers to bulk transportation of goods, cargo, or products using different types of vehicles. This includes trucks, trains, ships, airplanes, and other ways. Businesses that are involved in the goods and transportation industry must register for GST. This registration guarantees that they adhere to the tax laws governing the transport industry and permits them to charge GST on their services where appropriate. Companies can apply for GST online with ease to ensure precise remittance of taxes on transport services, simplify tax collection, and expedite compliance.
Transportation Types:
Land Transportation: Transport services for general goods (not including consumables), transportation services by road, other services of transportation via land for goods (not elsewhere classified, or n.e.c.), railway transport services
Transportation via Water: Transportation along the coast and over the oceans is made possible by ships such as tankers, refrigeration ships, bulk cargo ships, and container ships, inland waterway shipping uses tanks, refrigerated ships, and other watercraft.
Transportation through pipeline: Pipeline-based transportation services for petroleum, water, natural gas, and wastewater.
Air Transportation: Services for sending letters, packages, and other items by air
Transport via Space: Freight transport services in space
Freight Handling: This covers tasks including shipping, freight forwarding, freight inbound and outbound, and cargo charges.
Transportation Service Is Excluded from the GST
Commodity transportation providers are not included. It includes exceptions for goods transportation services by road and courier services offered by inland waterways. As a result, even under the GST system, road goods transport services remain excluded. GST only applies to goods transport companies.
What Does Freight Charges Include?
The expenses related to moving products from one place to another are usually included in freight rates.
1. Transportation fees
2. Handling charges
3. Insurance during transit
Freight charges exclude customs duties, taxes, and fees at the destination.
Goods Transportation vs Freight
The processes of transferring goods are referred to as "freight" and "goods transportation services," but they highlight distinct elements:
Freight: Freight is a term that refers to the activities of a business of moving goods or cargo from one place to another.
Transportation Services for Goods: This expression highlights the organised and methodical handling of different items and concentrates on the particular services provided during the transportation process.
Goods Transport Services GST Rates 9965 SAC Code
The Products and Services Accounting Code (SAC) is listed below. You can find the GST tax that applies to your services. You can verify the service details and six-digit code.
SAC | Description | Percentage |
9965 | Rail transport of cargo Applicable condition: The ITC for products used to provide the service is not applicable to the payment of central taxes or integrated taxes on the service. | CGST @ 2.5% SGST @ 2.5% IGST @ 5% |
9965 | Ship cargo transportation Applicable condition: No credit for ITC on items (except ships, tankers, and bulk carriers) used in providing the service is claimed. | CGST @ 2.5% SGST @ 2.5% IGST @ 5% |
9965 | Services of the goods transport agency (GTA) Applicable condition: No credit has been taken for ITC paid on the products and services used in providing the service. | CGST – 2.5% SGST – 2.5% IGST – 5% |
Services of the goods transport agency (GTA) Applicable condition: From this point forward, the GTA that opts to pay central tax @ 6% will have to pay central tax @ 6% on any GTA services it supplies. | CGST – 6% SGST – 6% IGST – 12% | |
9965 | A person other than the Indian Railways transports products in containers by train. | CGST – 6% SGST – 6% IGST – 12% |
9965 | Transportation of natural gas, crude oil, motor spirit (gasoline), high-speed diesel, or aviation turbine fuel through pipeline Applicable condition: No credit has been taken for ITC on the products and services used for providing the service. | CGST – 2.5% SGST – 2.5% IGST – 5% |
9965 | Conveyance of products using several modes (multimodal transportation) | CGST – 6% SGST – 6% IGST – 12% |
9965 | Goods Transport services apart from the ones mentioned above | CGST – 9% SGST – 9% IGST – 18% |
9965 | Services for transport of goods including road transportation, excluding the services of goods transportation services of a courier agency/ inland waterways. | CGST – Nil SGST – Nil IGST – Nil |
9965 | Services that involve flying products from overseas to a customs clearing post in India. | CGST – Nil SGST – Nil IGST – Nil |
9965 | Services involving the air delivery from a customs clearing station located in India to an overseas destination. Applicable condition: Nothing in this serial number is applicable after September 30, 2020 | CGST – Nil SGST – Nil IGST – Nil |
9965 | Services for shipping products from an Indian customs clearance station to an overseas destination. Applicable condition: Nothing in this serial number is applicable after September 30, 2020 | CGST – Nil SGST – Nil IGST – Nil |
9965 | Transport services by rail or vessel In India for defence or military equipment, railroad equipment, relief supplies for victims of calamities and accidents, organs, agricultural products, salt, milk, newspapers or magazines registered with the Newspapers | CGST – Nil SGST – Nil IGST – Nil |
9965 | Services through the transportation of products in a goods carriage for agricultural products, milk, food grains, and salt, organic manure, newspapers or magazines registered with the Newspapers, goods, where the consideration for the shipment on a consignment shipped in a single carriage, is less than Rs. 1,500, goods, where the consideration for the commuting them for a single consignee, is less than Rs. 750 | CGST – Nil SGST – Nil IGST – Nil |
Conclusion
The expenses incurred when moving products from one location to another are known as freight charges. These fees may consist of a range of prices. It entails handling fees, coverage, transportation fees, and other costs related to the shipment of goods. Knowing the HSN code for these services helps with proper documentation and compliance to the guidelines of GST.
FAQ
What is the difference between the HSN Code and the SAC Code?
The SAC code is used to classify services. Conversely, the HSN code is used to classify goods. Classifying charges incurred during the transportation of products is done with the HSN Code of Freight Charges, and categorising services, including transportation services, is done with the SAC Code.
How to determine the HSN Code of Freight Charges?
The HSN Code of Freight Charges is determined by the kind of expenses that are incurred during the shipment of goods.
Can the HSN Code of Freight Charges change?
It is possible for the HSN Code of Freight Charges to be altered in response to modifications in tax laws and regulations.
Does the HSN Code of Freight Charges remain the same for all types of goods?
No, the HSN Code of Freight Charges may not be the same for different kind of goods being shipped.
Is the HSN Code of Freight Charges applicable only to international trade?
No, both foreign and domestic transactions use the HSN Code of Freight Charges.
Who determines the HSN Code of Freight Charges?
It is up to the importer or exporter to figure out the HSN Code of Freight Charges.
How can I find the HSN Code of Freight Charges for my goods?
The HSN Code of Freight Charges for your merchandise can be obtained from your country's tax rules and regulations or from a tax specialist.
How is the HSN Code used in documentation by freight providers?
Freight charges are classified and documented using the HSN Code of Freight Charges. It has to be mentioned in several documents, including bills of lading and invoices.
Do all countries use the HSN Code?
No, the HSN Code is not used in every nation. Nonetheless, a comparable approach is used in many nations to categorise products and services for taxation.
What is 9965 SAC code under GST?
SAC Code 9965 is applicable to the services provided by goods transport agencies (GTAs) engaged in transportation of goods. The transportation of various goods, including used household goods intended for personal use, falls under this code. GTAs are companies that issue consignment notes and engage in road transport.
What GST rate for freight charges is applicable under HSN code 9965?
Under HSN code 9965, a 12% GST rate applies to the freight charges. However, as rates may get updated, it is crucial to confirm this information with the most recent GST rate schedule or get advice from a tax expert.
What is the HSN code for a GTA (goods transport agency)?
The product Transport Services is identified by HSN code 9965. It is a crucial identifier for the Harmonised System Nomenclature's categorisation of goods and services. This unique code plays a crucial role in classifying goods and services for commerce and tax purposes.
What is the difference between SAC 9965 and 9967?
SAC 9965 covers the services of a product transport agency. On the other hand, SAC 9967 covers the services of a courier agency. The primary distinction is in the services provided, with 9967 concentrating on courier services and 9965 on the transportation of products. The CGST Notification (Rate) has been modified to remove any ambiguity surrounding the GTA Service's classification under HSN 9965 or 9967. According to the updated classification, "Support services in transport" will fall under SAC 9967. On the other hand, GTA services will now only be included under SAC 9965.
Related Posts
See AllOpening a bank account is an essential step in managing your finances. In India, it requires submitting specific documents to comply with...
India's young population, inexpensive internet, and widespread smartphone use have all contributed to the country's notable rise in the...
The E-Way Bill system simplifies the transportation of products under GST, but compliance requires knowledge of its validity and distance...
Comments