GST on freight forwarding and logistics services — place of supply 2026

GST on Freight Forwarding and Logistics Services — Place of Supply 2026

Complete Guide to Domestic Freight, Export Freight, Import Logistics, Freight Forwarders, Intermediary Services, GST Rate & Documentation

Introduction

Freight forwarding and logistics form an essential part of India’s domestic and international supply chain. Freight forwarders, customs brokers, logistics companies, transport operators, warehouse providers and multimodal transporters often perform multiple activities in a single transaction.

A typical logistics arrangement may involve:

Transportation of goods

Freight booking

Cargo handling

Documentation

Customs coordination

Warehousing

Loading and unloading

Port-related services

Container handling

Consolidation/deconsolidation

Delivery coordination

Import/export logistics

Multimodal transportation

From a GST perspective, however, these activities cannot always be treated in the same manner.

The Place of Supply (POS) is particularly important because it determines whether the transaction is:

Intra-State supply;

Inter-State supply;

Export of services;

Taxable in India; or

Potentially outside the scope of Indian GST.

The position becomes more complicated when one party is located outside India.

For FY 2026-27 and beyond, businesses should pay particular attention to the distinction between:

Transportation of goods

and

Freight forwarding/intermediary/support services.

The classification of the actual service and the contractual relationship can materially change the Place of Supply.

1. What Is Freight Forwarding?

A freight forwarder generally coordinates the movement of cargo from one location to another.

Depending on the business model, a freight forwarder may:

Arrange transportation;

Book shipping space;

Coordinate with airlines/shipping lines;

Prepare documentation;

Arrange customs-related support;

Coordinate inland transportation;

Arrange warehousing;

Consolidate cargo;

Deconsolidate cargo;

Issue commercial documents;

Provide end-to-end logistics.

However, the GST treatment depends on what the freight forwarder is actually supplying.

A business cannot determine GST merely from its trade name.

For example:

“ABC Freight Forwarders Pvt. Ltd.”

may provide completely different services from another company using the same description.

2. Why Place of Supply Is So Important

GST is destination-based.

Therefore, after determining whether a service is taxable, the next important question is:

Where is the service treated as supplied?

This is the Place of Supply.

The answer helps determine whether:

Supplier + POS are in same State

→ Generally CGST + SGST

or

Supplier + POS are in different States

→ Generally IGST

or

Supplier in India + recipient outside India + POS outside India

→ Potential export of services, subject to all conditions.

3. Main Laws Governing Freight & Logistics POS

The important provisions are primarily found in:

IGST Act, 2017

Particularly:

Section 12 — supplier and recipient both in India;

Section 13 — supplier or recipient outside India;

Section 2(6) — export of services;

Section 2(13) — intermediary.

The statutory definition of intermediary covers a broker, agent or other person who arranges or facilitates a supply between two or more persons, but excludes a person who supplies the relevant goods or services on his own account.

4. First Step — Identify the Actual Service

Before determining POS, identify the actual supply.

A freight company may provide:

A. Transportation service

Example:

Delhi → Mumbai transportation of goods.

B. Freight forwarding service

Example:

Booking cargo with shipping line and coordinating export shipment.

C. Customs-related support

Example:

Documentation and coordination for customs clearance.

D. Warehousing

Example:

Storage of imported goods.

E. Multimodal transportation

Example:

Factory → Port → International destination using road + sea.

F. Intermediary service

Example:

Indian agent arranges a foreign shipping company’s service between the foreign principal and customer.

These should not automatically be given the same Place of Supply treatment.

5. Place of Supply When Both Supplier and Recipient Are in India

Where both supplier and recipient are located in India, Section 12 of the IGST Act applies.

For ordinary services, Section 12(2) generally provides:

Registered recipient

POS = location of recipient

Unregistered recipient

POS = recipient’s address on record, and where such address is unavailable, supplier’s location.

However, freight and transportation services have a specific rule.

6. Transportation of Goods — Section 12(8)

For services by way of transportation of goods, including mail or courier, where the supplier and recipient are in India:

Registered person

POS = location of the registered recipient

Unregistered person

POS = location where goods are handed over for transportation.

There is also an important proviso for transportation of goods to a place outside India.

7. Example — Domestic Freight

Suppose:

Supplier:

Delhi-based transporter

Recipient:

Maharashtra GST-registered company

Goods:

Delhi → Maharashtra

The transportation service is supplied to a registered person.

Therefore:

POS = Maharashtra

Supplier location = Delhi

POS = Maharashtra

Since supplier and POS are in different States:

GST = IGST

8. Example — Unregistered Recipient

Suppose a transporter provides service to an unregistered person.

Goods are handed over for transportation at:

Patna, Bihar

Then, subject to the specific statutory rule:

POS = Patna, Bihar

The location where goods are handed over becomes relevant.

9. Export Transportation — Important Change

This is one of the most important updates professionals should understand.

Earlier, Section 13(9) of the IGST Act contained a specific Place of Supply rule for transportation of goods where the supplier or recipient was outside India.

However, Section 13(9) was omitted with effect from 1 October 2023.

Therefore, old articles stating that international transportation automatically follows the old “destination of goods” rule under Section 13(9) should not be blindly followed for 2026.

10. Current Rule for International Transportation

After the omission of Section 13(9), transportation of goods where the supplier or recipient is outside India generally falls back on the applicable rules under Section 13.

CBIC clarified that transportation of goods, other than mail/courier, in cases where the supplier or recipient is outside India, is determined under the default rule in Section 13(2) and not the performance-based rule under Section 13(3).

Section 13(2) generally provides:

POS = location of recipient

where the recipient’s location is available in the ordinary course of business.

If recipient location is not available:

POS = location of supplier.

11. Example — Indian Freight Company + Foreign Customer

Suppose:

Indian logistics company:

Delhi, India

Customer:

Singapore

Indian company provides freight/logistics service directly to the Singapore customer.

If the service is not an intermediary service and the relevant conditions are satisfied:

Recipient location = Singapore

Therefore, under Section 13(2):

POS = Singapore

This can potentially support export-of-services treatment, subject to satisfying all conditions under Section 2(6).

12. Export of Services — All Five Conditions

A service qualifies as an export of services only when all prescribed conditions are satisfied.

Broadly:

Supplier is located in India;

Recipient is located outside India;

Place of supply is outside India;

Payment is received in convertible foreign exchange or Indian rupees where permitted by RBI; and

Supplier and recipient are not merely establishments of a distinct person.

These conditions are set out in Section 2(6) of the IGST Act.

Therefore:

Foreign customer alone does not automatically make a freight-forwarding service an export.

13. The Intermediary Issue — Most Important for Freight Forwarders

This is probably the most litigated/practically important area for freight forwarding businesses.

Section 2(13) defines an intermediary as a broker, agent or other person who arranges or facilitates the supply of goods or services between two or more persons.

But the definition specifically excludes a person who supplies the relevant goods/services on his own account.

Therefore, the first question should be:

Is the freight forwarder supplying the service on its own account?

OR

Is it merely arranging/facilitating someone else’s supply?

14. Why Intermediary Classification Matters

Section 13(8)(b) provides a special Place of Supply rule for intermediary services:

POS = location of supplier

This can have a major impact on export-of-services eligibility.

For example:

Indian intermediary

Foreign principal

Intermediary service

→ POS may remain India

Therefore, the service may not satisfy the export condition requiring POS outside India.

15. Example — Indian Freight Agent as Intermediary

Suppose:

A foreign shipping company appoints an Indian agent.

The Indian agent:

Finds customers;

Arranges contracts;

Facilitates shipping services;

Receives commission;

Does not provide the main transportation service on its own account.

If the arrangement qualifies as intermediary service:

Supplier location:

India

Under Section 13(8)(b):

POS:

India

Therefore, the service may not qualify as export merely because the principal is outside India.

16. Freight Forwarder on Principal-to-Principal Basis

Now consider a different structure.

Indian freight forwarder contracts directly with the customer and undertakes responsibility for transportation/logistics.

The forwarder may:

Purchase transportation from carriers;

Arrange shipping;

Coordinate logistics;

Issue its own invoice;

Assume contractual responsibility;

Supply the logistics service to the customer on its own account.

This can be materially different from acting merely as an intermediary.

CBIC has clarified that a person supplying the main service on a principal-to-principal basis is not automatically an intermediary merely because third-party services are used.

17. Subcontracting Is Not Automatically Intermediary

This is another important principle.

Suppose:

A

contracts with customer B for logistics service.

A subcontracts part of the logistics work to:

C

C performs the main service or part of the main service for A.

C is supplying service to A on its own account.

CBIC’s intermediary circular specifically explains that sub-contracting for a service does not by itself make the subcontractor an intermediary.

18. Example — Freight Forwarder Using Shipping Line

Suppose:

Indian Freight Forwarder:

A

Customer:

B

Shipping Line:

C

A contracts with B to provide international freight forwarding/logistics.

A purchases ocean freight from C.

A invoices B.

If A is responsible for the main supply and is acting on principal-to-principal basis, A should not automatically be classified as an intermediary merely because C performs part of the transportation.

The actual contractual arrangement must be examined.

19. Freight Forwarding vs Intermediary — Key Difference

Particular Principal Supply Intermediary

Acts on own account Yes Generally No

Main service supplied by itself Yes Arranges/facilitates another’s supply

Commercial responsibility Usually assumed Usually limited to facilitation

Separate main supplier involved May be subcontractor/vendor Central to arrangement

Section 13(8)(b) Not automatically applicable Applicable where intermediary conditions met

Export possibility Can be available Often restricted by POS rule

20. Documentation Determines GST Position

For freight forwarding businesses, documentation is extremely important.

The following can help establish the actual nature of the transaction:

Customer agreement;

Freight forwarding agreement;

Purchase order;

Shipping instructions;

House Bill of Lading;

Master Bill of Lading;

Invoice;

Debit note;

Credit note;

Contract with shipping line;

Contract with overseas principal;

Commission agreement;

Insurance documents;

Customs documents;

E-way bill;

Transport documents.

The wording of contracts should accurately reflect the commercial substance.

21. Freight Forwarding Invoice

The invoice should clearly identify:

Nature of service;

Description of cargo;

Origin;

Destination;

Freight charges;

Handling charges;

Documentation charges;

Customs-related charges, where applicable;

Other logistics charges;

GST rate;

IGST/CGST/SGST;

Place of Supply.

For export-of-services claims, the invoice should also satisfy the applicable export-invoice requirements.

22. Supporting Services in Transport

GST’s rate schedule separately recognises supporting services in transport under Heading 9967.

The CBIC rate schedule currently shows 18% GST for supporting services in transport, subject to specific entries/exemptions that may apply to particular transactions.

Examples can include certain:

Cargo handling;

Freight forwarding support;

Logistics support;

Transport-related auxiliary services.

However, classification should be based on the actual service rather than simply using the term “logistics”.

23. Transportation of Goods — Rate Can Differ

Not every transportation service carries the same GST rate.

For example, the CBIC rate schedule contains different entries for:

Rail transportation;

GTA;

Multimodal transportation;

Other goods transportation;

Specific vessel services;

Certain exempt transportation services.

Therefore:

Classification + rate + Place of Supply must be checked separately.

24. Multimodal Transportation

Multimodal transportation is specifically recognised under Heading 9965.

Broadly, it involves carriage of goods using at least two different modes of transport, such as:

Road;

Rail;

Air;

Inland waterways;

Sea.

The rate schedule also defines a multimodal transporter as a person who enters into a contract to undertake multimodal transportation against freight and acts as principal rather than as agent of the consignor/consignee/carrier.

This principal-versus-agent distinction is extremely important.

25. Example — Road + Sea + Road

Suppose:

Goods move:

Factory → Truck → Port → Ship → Foreign destination

The logistics provider enters into one contract and assumes responsibility for the multimodal movement.

If it meets the statutory definition of multimodal transporter, the transaction may be classified accordingly.

The applicable GST rate and Place of Supply should then be determined under the relevant provisions.

26. Customs Clearance Charges

Freight forwarders frequently recover:

Customs documentation charges;

Handling charges;

Clearance charges;

Port charges;

Agency charges.

These amounts should be analysed to determine whether they are:

Part of a composite supply;

Separate supplies;

Pure-agent reimbursements;

Third-party charges recovered by the supplier.

The treatment cannot be decided merely because an amount is shown as “reimbursement”.

27. Pure Agent Concept

A genuine pure-agent arrangement can receive specific GST treatment if all prescribed conditions are satisfied.

A business should not automatically exclude reimbursement from taxable value.

The transaction should satisfy the statutory pure-agent conditions.

Documentation should establish:

Supplier acts as pure agent;

Payment is made on behalf of recipient;

Amount is separately indicated;

Recipient is liable to make the payment;

Supplier does not hold title/benefit;

Conditions of the valuation rules are satisfied.

28. Composite Supply in Logistics

A logistics company may provide:

Transportation;

Warehousing;

Loading/unloading;

Documentation;

Tracking;

Delivery.

If these supplies are naturally bundled and supplied together, the transaction may need to be examined under the composite supply provisions.

The tax treatment generally follows the principal supply, subject to the applicable GST provisions.

However, separate independent supplies should not be artificially bundled merely to obtain a preferred tax treatment.

29. Import Logistics

Consider:

Foreign seller:

Singapore

Indian importer:

Mumbai

Indian freight forwarder:

Mumbai

The Indian forwarder may arrange:

Port handling;

Inland transportation;

Customs coordination;

Warehousing;

Delivery.

Each component should be examined based on its actual supply and contractual structure.

The GST treatment of freight included in import transactions can also involve valuation/customs considerations, so businesses should maintain proper linkage between:

Bill of Entry;

Freight invoice;

CHA/customs documentation;

GST invoice.

30. Export Logistics

Suppose an Indian exporter sells goods to Germany.

Indian freight forwarder provides logistics services.

The forwarder should establish:

Who is its customer?

Is the customer in India or Germany?

Is it supplying transportation itself?

Is it merely arranging another person’s supply?

Who bears contractual responsibility?

What is the applicable POS rule?

Does the transaction satisfy Section 2(6)?

Only after answering these questions should the business decide whether GST is:

CGST + SGST;

IGST;

Zero-rated export;

Or otherwise treated under the applicable provisions.

31. Important: Export of Goods ≠ Export of Freight Service

This is a common mistake.

Suppose goods are exported from India to Dubai.

The fact that the goods are exported does not automatically mean that every service connected with those goods is an export of services.

The freight service has to independently satisfy the conditions applicable to services.

This distinction is especially important for:

Freight forwarders;

CHA/customs agents;

Logistics companies;

Shipping agents.

32. International Customer Does Not Automatically Mean Zero-Rated

A foreign customer is only one condition.

For export of services, all conditions under Section 2(6) must be satisfied.

Therefore:

Foreign currency + foreign customer ≠ automatic export.

The Place of Supply must also be outside India.

And the intermediary rule can change the result.

33. Intermediary Services — 2026 Position

Section 13(8)(b) continues to prescribe:

Intermediary service POS = location of supplier.

Therefore, where an Indian freight agent qualifies as an intermediary:

Supplier = India

POS = India

This can prevent the service from satisfying the POS condition for export.

34. CBIC’s Principal-to-Principal Clarification

CBIC Circular No. 159/15/2021-GST is particularly relevant.

It explains that where a supplier provides the main service fully or partly on its own account, it should not be treated as intermediary merely because another party is involved.

It also specifically clarifies that subcontracting of a service is not intermediary service where the subcontractor supplies the main service to the principal on its own account.

This is highly relevant to freight and logistics businesses.

35. Practical Test for Freight Forwarders

Ask these five questions:

1. Whose service am I supplying?

2. Am I supplying it on my own account?

3. Am I contractually responsible for the service?

4. Am I merely arranging another person’s service?

5. Who is my actual recipient?

The answers can determine the correct POS analysis.

36. Common GST Mistakes in Freight Forwarding

Mistake 1

Treating every freight forwarder as an intermediary.

Incorrect.

Actual contractual role must be examined.

Mistake 2

Assuming every foreign customer means export.

Incorrect.

Section 2(6) conditions must all be satisfied.

Mistake 3

Using the old Section 13(9) destination rule.

Incorrect for current transactions.

Section 13(9) was omitted with effect from 1 October 2023.

Mistake 4

Ignoring Section 13(8)(b).

An actual intermediary service can have POS at supplier location.

Mistake 5

Treating reimbursement as automatically outside GST.

Pure-agent conditions must be checked.

Mistake 6

Using one GST rate for every logistics charge.

Different services can have different classifications/rates.

Mistake 7

Poor contractual documentation.

This can make it difficult to establish whether the company acted as:

Principal;

Agent;

Intermediary;

Subcontractor;

Transporter;

Multimodal transporter.

37. Place of Supply — Quick Decision Table

Situation Main POS Principle

Domestic service to registered recipient Recipient location, subject to specific rule

Domestic goods transportation Section 12(8)

International service with foreign recipient Section 13(2), unless specific exception applies

Intermediary service Supplier location

International goods transportation after 1 Oct 2023 Default Section 13 framework, not old Section 13(9)

Export of service POS must be outside India + other Section 2(6) conditions

Multimodal transportation Classification and applicable specific rules must be examined

38. Documentation Checklist for Freight Forwarders

A professional freight/logistics company should maintain:

Customer documents

GSTIN;

PAN;

Overseas customer details;

Contract;

Purchase order.

Shipment documents

Shipping bill;

Bill of Lading;

Airway Bill;

Delivery order;

E-way bill;

Cargo manifest.

Commercial documents

Freight invoice;

Debit note;

Credit note;

Vendor invoice;

Carrier invoice.

Tax documents

GST invoice;

LUT, where applicable;

GST return records;

E-invoice, where applicable;

Payment evidence;

Foreign remittance evidence, where relevant.

39. LUT and Export of Services

Where a freight/logistics service qualifies as export of services, a registered taxpayer may supply it under the applicable zero-rated mechanism, including under LUT/bond without payment of IGST, subject to the conditions and procedures applicable to zero-rated supplies.

However:

LUT should not be used merely because the customer is located outside India.

The taxpayer should first establish that the service actually qualifies as an export.

40. Foreign Currency Payment

Payment in convertible foreign exchange is one of the conditions under the export-of-services definition, subject to the statutory allowance for Indian rupee receipts wherever permitted by RBI.

Therefore, logistics exporters should maintain:

Bank advice;

FIRC/BRC/evidence as applicable;

Invoice;

Customer contract;

Shipping documents.

41. GST Reconciliation for Logistics Companies

At month-end, a freight forwarder should reconcile:

Sales Register

with

GST Returns

and

Customer Ledger

and

Shipping Documents.

For export services additionally reconcile:

Invoice;

LUT;

Foreign customer;

POS;

Payment;

Bank realisation;

GST return.

This reduces the risk of an incorrect “export without tax” position.

42. Suggested Accounting Structure

A logistics company may maintain separate ledgers for:

Domestic freight income;

Export freight income;

Freight forwarding charges;

Documentation charges;

Handling charges;

Customs coordination charges;

Warehousing charges;

Transportation charges;

Commission income;

Reimbursements;

Pure-agent recoveries.

This makes GST classification and reporting much easier.

43. A Practical Example — Indian Exporter

Facts

Exporter:

Bihar, India

Freight forwarder:

Delhi, India

Customer of freight forwarder:

Exporter in Bihar

Shipment:

India → USA

Since both supplier and recipient of freight service are in India, the domestic POS rules apply.

For transportation of goods supplied to a registered person, Section 12(8) generally points to the recipient’s location, subject to the statutory proviso applicable where goods are transported outside India.

Therefore, the fact that the goods ultimately leave India does not by itself convert the freight forwarder’s service into an export of services.

44. Another Example — Indian Freight Company + Foreign Client

Facts

Supplier:

India

Recipient:

USA

Service:

Logistics service supplied on own account

Assume the service is not intermediary.

Under Section 13(2):

POS generally follows the recipient’s location where available.

Therefore:

POS = USA

If all Section 2(6) export conditions are satisfied, the service can potentially qualify as export of services.

45. Third Example — Indian Agent + Foreign Shipping Company

Facts

Supplier:

Indian agent

Principal:

Foreign shipping company

Indian agent:

Only facilitates contracts and earns commission.

If the arrangement satisfies the definition of intermediary:

Section 13(8)(b) applies.

POS:

India

Therefore, the service may not qualify as export merely because the principal is located outside India.

46. Freight Forwarder vs CHA vs Transporter

These terms should not be used interchangeably.

Transporter

Primarily provides transportation.

GTA

Provides goods transportation agency service as defined under GST law.

Freight Forwarder

May arrange/undertake transportation and related logistics.

Customs Broker/CHA

Primarily deals with customs-related activities subject to the applicable regulatory framework.

Logistics Provider

May provide a bundled end-to-end service.

The actual contract and supply determine GST treatment.

47. Why 2026 Compliance Needs Extra Attention

The logistics sector has become increasingly integrated.

A single invoice may include:

Freight + documentation + handling + customs + transportation + warehousing.

If everything is simply recorded under “freight charges”, there can be classification and POS issues.

Therefore, businesses should create a service-wise GST matrix.

48. Recommended GST Matrix for Logistics Businesses

Service Customer Supplier Location Key POS Rule GST

Domestic transportation Registered India Section 12(8) As applicable

Domestic transportation Unregistered India Section 12(8) As applicable

Foreign customer – own-account service Outside India India Section 13(2), subject to exceptions Potential export

Foreign customer – intermediary Outside India India Section 13(8)(b) POS India

Multimodal transportation Depends India Specific classification + applicable POS As applicable

Supporting transport service Depends India Applicable service rule Generally 18%, subject to exceptions

CBIC’s rate schedule shows supporting transport services under Heading 9967 at 18%, while different transportation categories under Heading 9965 have different rates/conditions.

49. Key 2026 Takeaways

Point 1

Don’t use the old Section 13(9) rule for current international goods transportation transactions.

Point 2

Section 13(9) was omitted from 1 October 2023.

Point 3

International transportation may fall under the default Section 13(2) framework.

Point 4

Freight forwarders are not automatically intermediaries.

Point 5

Principal-to-principal supply can fall outside intermediary definition.

Point 6

Section 13(8)(b) remains critical for genuine intermediary services.

Point 7

Foreign customer alone does not establish export of services.

Point 8

All Section 2(6) conditions need to be satisfied.

Point 9

GST rate depends on actual classification.

Point 10

Contracts and documentation are crucial.

50. Final Checklist — Freight Forwarding GST 2026

Before finalising GST treatment, ask:

☑ What exact service is being supplied?

☑ Who is the recipient?

☑ Is recipient registered?

☑ Where is the supplier located?

☑ Where is the recipient located?

☑ Is it transportation or supporting logistics?

☑ Is it multimodal transportation?

☑ Is the supplier acting as principal or agent?

☑ Does intermediary definition apply?

☑ Is Section 12 or Section 13 applicable?

☑ If Section 13 applies, is any specific exception applicable?

☑ Does Section 13(8)(b) apply?

☑ Does the service satisfy Section 2(6)?

☑ Is LUT required/available?

☑ Is GST rate correctly classified?

☑ Are invoices and shipment documents available?

☑ Are foreign receipts properly reconciled?

Conclusion

GST on freight forwarding and logistics services cannot be determined merely by looking at the words “freight”, “logistics” or “forwarding” on an invoice.

The correct approach is:

Identify the actual service → determine the contractual role → identify supplier and recipient → determine whether Section 12 or Section 13 applies → examine intermediary provisions → determine Place of Supply → determine whether export conditions are satisfied → apply the correct GST rate → maintain supporting documentation.

For 2026, one of the most important legal developments to remember is that Section 13(9) of the IGST Act was omitted with effect from 1 October 2023. CBIC subsequently clarified that international transportation of goods, other than mail/courier, where one party is outside India is generally governed by the default Section 13(2) rule, rather than the old performance/destination-based Section 13(9) rule.

At the same time, the intermediary question remains critical. An Indian freight forwarder acting on its own account is not automatically an intermediary, while an agent who merely arranges or facilitates another person’s supply can fall within Section 2(13), with Section 13(8)(b) potentially placing the POS at the supplier’s location. CBIC’s Circular No. 159/15/2021-GST specifically discusses the principal-to-principal and subcontracting distinction.

Therefore, freight forwarding businesses should review their contracts, invoices, service descriptions and accounting configuration rather than relying on generic “export freight = zero-rated” or “freight forwarding = intermediary” assumptions.