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In India, GST on delivery or shipping charges depends on the actual supply, the contract and who is liable for the charge—not simply on the label shown at checkout. Freight charged by the seller on a sales invoice is taxable; when transport is part of a composite supply with the goods, the principal supply’s rate applies. A genuinely separate transport service must instead be classified under the applicable transport-service entry. E-way bill consignment value is a separate calculation and does not decide whether shipping is subject to GST.
Start with who supplies transport and who owes the charge
For GST valuation, the key question is not only who collects or pays the money. Section 15 of the Central Goods and Services Tax Act, 2017 includes amounts the supplier is liable to pay in relation to a supply when the recipient pays them on the supplier’s behalf. CBIC applies this principle to transportation charges: where the seller is liable for the transport cost, it forms part of the value of the supply even if the buyer makes the payment.
Check the sales and transport contracts, the seller’s invoice and the arrangement with the carrier. A separate line called “delivery” does not by itself establish that transport is a separate supply. Conversely, itemizing a charge does not automatically make it part of the goods’ taxable value in every arrangement.
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When delivery follows the GST treatment of the goods
Under section 8 of the CGST Act, a composite supply is treated according to its principal supply. CBIC’s Frequently Asked Questions gives the example of goods that cannot be supplied without cartage, unloading or transportation: those charges form part of the composite supply, so the rate applicable to the goods applies.
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This is not a blanket rule that every delivery charge inherits the product’s rate. The relevant question is whether the goods and transport are supplied together as a composite supply, with transport ancillary to the principal supply, or whether transport is a distinct service. The contract and real nature of the transaction matter more than checkout wording alone.
When transport is a separate service
If transport is supplied separately, identify the service actually provided and use the applicable entry in the current CBIC rate schedule. The schedule has distinct categories for goods transport, postal services and courier services, with rates and conditions that vary by entry. A courier shipment, a goods transport agency arrangement and another form of transport should not be treated as interchangeable without checking the classification.
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CBIC’s GST Goods and Services Rates schedule is the relevant starting point for the service category and conditions. Because the appropriate entry depends on the arrangement, there is no single GST rate for all “shipping.” Check current notifications and the schedule before applying a rate to an invoice.
Marketplace checkout collection does not settle tax liability
A marketplace may collect a single checkout payment covering goods and delivery, but collection alone does not establish who supplies the transport service or who is responsible for GST. CBIC’s Sectoral FAQs explain that an e-commerce operator pays tax instead of the actual supplier only for services notified under section 9(5) of the CGST Act. Do not infer that this rule applies to a goods sale or every delivery charge merely because the platform collected the money.
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For a specific transaction, identify the supplier of each service, the party legally liable for the charge and whether the relevant service falls within a notified section 9(5) category.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.E-way bill consignment value is not the same as GST treatment
CBIC’s E-Way Bill FAQs, dated March 24, 2018, addresses whether shipping charges charged by e-commerce companies must be included in “consignment value” when they are not mentioned on the merchant’s invoice. It says those charges need not be included in that circumstance. The FAQ describes consignment value for e-way bill purposes, including applicable GST and cess.
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That answer concerns the e-way bill calculation; it does not create a general GST exemption for shipping. Whether output GST applies to a delivery charge remains a separate question governed by the supply, liability and classification rules.
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1Clear out junk files and repair common Windows errors2Fix the driver behind crashes, sound loss and screen glitches3Repair Windows errors before they cause bigger problemsExport-bound courier services have a separate place-of-supply rule
For transportation of goods by mail or courier where both the supplier and recipient of the transport service are in India, section 12(8) of the Integrated Goods and Services Tax Act, 2017 generally places the supply at the registered recipient’s location or, if the recipient is unregistered, where the goods are handed over for transport. The section’s export proviso places the service at the goods’ foreign destination.
CBIC Circular No. 184/16/2022-GST, dated December 27, 2022, states that this export-bound courier service is inter-State and IGST is chargeable. See the CBIC circular for the clarification.
What to verify before invoicing a delivery charge
- Who contracts to provide transport, and who is legally liable for its charge?
- Does the charge appear on the seller’s invoice, and is the buyer paying an amount the seller owes?
- Is transport bundled with the goods as a composite supply, or supplied as a distinct service?
- Is the provider a courier, goods transport agency or another kind of transporter?
- Does a service notified under CGST Act section 9(5) apply, or is the platform only collecting payment?
- Is the destination domestic or outside India, and which place-of-supply rule applies?
These facts affect valuation, classification, operator liability and place of supply. For an actual invoice where the contract or classification is unclear, consult current CBIC materials and a qualified tax professional.
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