The packing charges hsn code on a sales invoice is simply the HSN of the goods being sold: section 15 of the CGST Act folds packing and forwarding billed by the seller into the goods' value and take the goods' rate. Packing charges on an AC are 18%, on packed rice 5%, and on fresh vegetables nil.
A separate packaging service done for someone else's goods is SAC 998540 at 18%. This page explains both cases, with examples, and the common mistakes. Freight is on the freight page.
Packing and forwarding: codes and GST rates
Item / SAC / GST- Packing charges on a sale of 18% goods18%Takes the goods' rate
- Packing charges on a sale of 5% goods5%Same rule
- Packing charges on a sale of nil rated goodsNilSame rule
- Packing and forwarding on a sales billAs the goodsPart of the value of goods
- Packaging service for a client's goods18%SAC 998540
- Packers and movers service18%Packing with transport
- Sale of packing material itself5%Cartons, tapes at their own rates
Quick facts
Rule
Section 15 includes incidental charges in the value of goodsPacking on a sales invoice
Same HSN and rate as the goodsSeparate packaging service
SAC 998540 at 18%Packers and movers
18% in most casesDigits to print
4 digits up to Rs 5 crore turnover, 6 aboveCommon wrong code
998540 for packing on a sales bill
Packing charges hsn code on a sales invoice
Section 15 of the CGST Act says the value of supply includes incidental expenses, including commission and packing, charged by the supplier to the recipient. So when a seller adds packing or packing and forwarding to an invoice for goods, that line is part of the goods. It should carry the goods' HSN, or be added to the goods' value on the same line, and be taxed at the goods' rate.
Machinery seller's invoice: Air compressor, HSN 8414 80, Rs 1,50,000. Packing and forwarding, Rs 3,000, taxed with the compressor at 18%. Taxable value Rs 1,53,000. CGST 9% Rs 13,770. SGST 9% Rs 13,770. Total Rs 1,80,540.
Packing charges hsn code and gst rate for mixed invoices
When an invoice has goods at different rates and one packing charge, the packing charge should be split across the goods in proportion to their value, or charged at the highest rate if it cannot be split. Many businesses avoid this by building packing into each item's price.
Packaging services: SAC 998540
A business that packs goods owned by others, such as a contract packer filling and sealing a brand's products, supplies packaging services under SAC 998540 at 18%. If the work is on goods of Chapters 1 to 22 for a registered person, it may count as job work on food at 5%; see job work.
Packers and movers
Packers and movers who pack household goods and transport them under one contract usually supply a composite service. The rate depends on the principal supply: if it is transport by a goods transport agency, the GTA rates of 5% or 18% may apply; otherwise 18%. See transport.
Packing material itself
Corrugated boxes are 5%, tapes, bubble wrap and plastic bags 18%. When a seller buys these and uses them to pack its goods, it takes credit of the GST paid and charges the goods' rate on the sale. See carton boxes and plastic bags.
Common packing charge errors
| Problem | Fix |
|---|---|
| Packing on a 5% goods bill charged at 18% | Use the goods' rate, 5% |
| Packing shown under SAC 998540 on a sales bill | Use the goods' HSN |
| Packing left out of the e-way bill value | Include it in the taxable value |
| Packing on nil goods charged at 18% | Packing follows the goods, so nil |
The packing charge rules on this page explain section 15 and composite supplies in general terms. Contracts for packing, moving and storage differ, so check the GST portal and ask a GST practitioner or chartered accountant about your billing format.
Frequently asked questions
What is the hsn code for packing charges?
On a sales invoice, packing takes the HSN of the goods sold. A separate packaging service is SAC 998540.
What is the GST rate on packing charges?
The same as the goods when billed by the seller. A separate packaging service is 18%.
How is packing and forwarding taxed?
When the seller adds packing and forwarding to a goods bill, it is taxed with those goods.
What is SAC 998540?
998540 is packaging services, at 18%.
What GST do packers and movers charge?
Usually 18%, or the GTA rates if transport by a goods transport agency is the main service.