When you issue invoices for freight or transport services, you might wonder: “Which code should I use—HSN or SAC?” Accurate coding is essential for GST compliance and avoiding errors. This article explains how to classify freight charges correctly in India, and what GST treatment applies.
What Are HSN & SAC Codes?
- HSN (Harmonized System of Nomenclature) codes classify goods globally and under GST for India.
- SAC (Service Accounting Codes) classify services under GST.
Since freight is a service, you use an SAC code — not an HSN code.
Why It Matters
Using the wrong code can lead to:
- Incorrect GST rate application
- Rejection or audit issues during GST return filing
- Penalties or delayed tax credit claims
Common SAC Codes for Freight / Transport Services
Here are typical SAC codes under GST for various transport services:
| Service Type | SAC Code | Description |
|---|---|---|
| Road transport of goods by GTA (Goods Transport Agency) | 996511 | Road freighting by a registered GTA |
| Road transport of goods (non-GTA) | 996511 (still) | Road transport where individual owner-driver conducts transport and no consignment note |
| Rail transport of goods | 996521 | Movement of goods by rail |
| Air transport of goods (cargo) | 996531 | Air freight services |
| Sea/Water transport of goods | 996532 | Sea freight services |
Also Read: HSN Code Full Form: Meaning, Importance & How It Works Under GST
Selecting the Correct Code — Step by Step
- Is it a service or goods?
Freight services = service → use SAC. - Mode of transport?
– Road (GTA or non-GTA) → SAC 996511
– Rail → SAC 996521
– Air → SAC 996531
– Sea/Water → SAC 996532 - GTA vs non-GTA:
If you are a registered Goods Transport Agency issuing consignment notes, the standard GTA SAC applies. - GST liability / exemption:
– Road freight by non-GTA often exempt if criteria met (individual truck owner, no consignment note).
– Others may carry GST at standard rate (depending on further conditions). - Invoice mention:
On the invoice, show the correct SAC code and GST rate/cess (if applicable) to ensure clarity.
Practical Example
You run a logistics firm offering road transport of goods by trucks and you are registered as a GTA. On your invoice you must:
- Use SAC 996511 for the service line “Transport of goods by road (GTA)”.
- Show applicable GST rate (for example, 18 % if service is taxable)
- Ensure other invoice details (GSTIN, HSN for other items, description, etc) are present.
Why HSN Code Is Not Used for Freight
Since HSN codes classify physical goods, they are irrelevant for pure transportation services.
Using an HSN code for freight could lead tax authorities to treat it as sale of goods rather than a service, leading to classification errors.
Key Tips for Businesses
- Always identify mode of transport first.
- Confirm if you or the service provider qualifies as a GTA.
- On invoices: show SAC code, service description, GST rate, and clear separation of freight portion vs other charges (if bundled).
- Maintain supporting records: consignment notes, transporter bills, exemption certificates if applicable.
- Review GST return forms (GSTR-1/GSTR-3B) to ensure the SAC codes align.
Conclusion
Correctly classifying freight charges under GST is not just compliance—it helps avoid penalties, supports smooth tax credit claims and ensures clarity in invoicing. Use SAC codes (not HSN) for freight/transport services. The most common code for road freight by a GTA is SAC 996511. Get your code right, and your freight billing becomes simple and compliant.