Looking for expert help with income tax and GST for courier franchise owners India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- Courier services are taxed at 18% Goods and Services Tax (GST) from 22 September 2025 (Notification 15/2025-Central Tax (Rate), Serial No. 12).
- Your GST turnover depends on your model: commission and delivery fees if the courier company bills the customer, the full freight if you bill the customer yourself.
- Commission income is outside Section 44AD presumptive tax (Section 44AD(6), Income-tax Act 1961). You keep books and file ITR-3.
- The courier company deducts 2% Tax Deducted at Source (TDS) on commission above Rs 20,000 a year. Small franchisees often get it back as a refund.
- Keep COD collections in a separate ledger. They are not your income.
Can a courier franchise owner use presumptive tax under Section 44AD? Usually not. Section 44AD(6) of the Income-tax Act 1961 excludes anyone earning commission or brokerage and anyone carrying on an agency business. Most courier franchisees earn a commission on bookings from the courier company, so they must keep books under Section 44AA and file ITR-3, not ITR-4.
You run a booking counter, a pickup van and two delivery staff, and the courier company sends you a monthly statement with a commission figure and a TDS line. That statement decides almost everything about your tax. It tells you whose supply the courier service is, what your GST turnover is, and why the 6% or 8% presumptive scheme your neighbour the kirana owner uses isn't open to you. This guide covers the GST rate, when you need to register, the TDS on your commission, and how your income is taxed for AY 2026-27 (FY 2025-26).
What GST rate applies to courier services?
18%. Notification 15/2025-Central Tax (Rate) rewrote Serial No. 12 of the services rate notification with effect from 22 September 2025. Under heading 9968, postal services, courier services, local delivery services and other delivery services all carry 9% Central GST, which means 9% CGST plus 9% SGST within a state, or 18% IGST across states.
So a Rs 500 parcel booking carries Rs 90 GST, and the customer pays Rs 590. The real question for a franchisee is who charges that Rs 90.
Whose supply is it: yours or the courier company's?
Courier franchises run on one of two models. Read your agreement and your airway bill (AWB) to see which one you're on.
Comparison
Two Courier Franchise Models and What They Mean for Tax
| Point | Agency model (company bills customer) | Own-invoice model (you bill customer) |
|---|---|---|
| Who issues the AWB or invoice to the sender | Courier company, in its name and GSTIN | You, in your name |
| Who pays GST on the freight | Courier company | You, at 18% |
| Your GST turnover | Commission and delivery fees you bill the company | Full freight billed to customers |
| What you pay the courier company | You remit bookings less your commission | Line-haul or network charges, billed to you with GST |
| Section 44AD presumptive tax | Not available: commission and agency income are excluded by 44AD(6) | Possible only if it is genuinely your own business, not agency; check with your CA |
| TDS on what you earn | Company deducts 2% on commission (194H, now 393) | Depends on how the company pays you |
Source: Notification 15/2025-Central Tax (Rate); Section 22, CGST Act 2017; Section 44AD(6), Income-tax Act 1961
Most national courier networks use the agency model. The rest of this guide assumes that model unless it says otherwise.
When do you need GST registration?
Section 22 of the Central Goods and Services Tax (CGST) Act requires registration once your aggregate turnover in a financial year exceeds Rs 20 lakh. Some special category states, such as Manipur, Mizoram, Nagaland and Tripura, have a Rs 10 lakh limit. The Rs 40 lakh limit you may have heard of is only for suppliers of goods, so it doesn't apply to a courier counter.
Worked example (agency model, Hyderabad). Your counter books Rs 3,00,000 of freight a month. The company pays you 25% commission, which is Rs 75,000, plus Rs 15 per parcel for 2,000 deliveries, which is Rs 30,000.
- Your monthly income: Rs 75,000 + Rs 30,000 = Rs 1,05,000
- Your yearly turnover: Rs 1,05,000 x 12 = Rs 12,60,000
That is below Rs 20 lakh, so Section 22 doesn't make you register. The Rs 36,00,000 of freight (Rs 3,00,000 x 12) is the courier company's turnover, not yours.
Same counter, own-invoice model. Now you bill the Rs 36,00,000 yourself. That crosses Rs 20 lakh, so you must register and charge 18% on every booking.
Two practical points. First, if you bill the courier company's office in another state, that is an inter-State supply. Notification 10/2017-Integrated Tax still exempts service suppliers from registration up to the same Rs 20 lakh (Rs 10 lakh in Manipur, Mizoram, Nagaland and Tripura). Second, many franchisors require a GSTIN in the agreement, whatever your turnover. Once you register, you charge GST on your commission and delivery fees, and you can claim input tax credit (ITC) on GST-charged rent, packing material and the franchise fee.
How much TDS does the courier company deduct?
The company deducts 2% on commission once the total paid or credited to you in the year exceeds Rs 20,000. For FY 2025-26 that's Section 194H of the Income-tax Act 1961. From 1 April 2026 the same deduction sits in Section 393(1) of the Income-tax Act 2025, Table Serial No. 1(ii). See our guide to TDS on commission under Section 194H for the details.
In our example: Rs 75,000 x 12 = Rs 9,00,000 commission, and 2% of that is Rs 18,000 TDS. Your delivery fees may be treated differently by the company, so check how each payment is described in your statement and in Form 26AS or the Annual Information Statement (AIS).
How is a courier franchisee's income taxed for AY 2026-27?
Section 44AD(6) of the Income-tax Act 1961 shuts out three groups from presumptive tax: professionals under Section 44AA(1), people earning commission or brokerage, and anyone carrying on an agency business. A courier franchisee on the agency model is in the second group and usually the third too. So you can't declare a flat 6% or 8% of turnover as profit.
What you do instead:
- Keep books. Section 44AA(2) requires an individual or HUF in business to keep books once income exceeds Rs 2,50,000 or turnover exceeds Rs 25 lakh in any of the three preceding years.
- Claim actual expenses. Rent, staff salaries, fuel, packing material, electricity and internet are deductible.
- Depreciate the franchise fee. A one-time franchise fee buys a franchise right, which Section 32(1)(ii) treats as an intangible asset. Depreciation is 25% a year, halved in the first year if you put it to use for less than 180 days.
- File ITR-3. Individuals with books-based business income file ITR-3. A partnership firm or LLP files ITR-5.
- Watch the audit limit. Under Section 44AB(a) a tax audit applies once turnover exceeds Rs 1 crore. The limit rises to Rs 10 crore if cash receipts and cash payments each stay within 5% of the totals. UPI and bank transfers don't count as cash.
Worked example, continued (FY 2025-26).
| Item | Amount (Rs) |
|---|---|
| Commission and delivery fees | 12,60,000 |
| Less: rent (20,000 x 12) | 2,40,000 |
| Less: two staff (12,000 x 2 x 12) | 2,88,000 |
| Less: electricity and internet (4,000 x 12) | 48,000 |
| Less: packing material (3,000 x 12) | 36,000 |
| Less: depreciation on Rs 1,50,000 franchise fee at 25% | 37,500 |
| Business income | 6,10,500 |
Under the new tax regime slabs for FY 2025-26, income up to Rs 4,00,000 is nil and the next Rs 4,00,000 is taxed at 5%. Tax is 5% of Rs 2,10,500, which is Rs 10,525. Total income is below Rs 12 lakh, so the Section 87A rebate (up to Rs 60,000) wipes it out. Tax payable is nil, and the Rs 18,000 TDS comes back as a refund once you file ITR-3. See our Section 87A rebate guide for how the rebate works.
If you missed the original due date, a belated return for AY 2026-27 can still be filed up to 31 December 2026 under Section 139(4). Without a return, that TDS just sits with the department.
Common mistakes courier franchisees make
Filing ITR-4 at 6% or 8%. It looks simpler, but commission income doesn't qualify for Section 44AD. You'd be reporting under a scheme that doesn't apply to you, and you'd skip the real expenses you're allowed to claim.
Mixing COD cash with income. Cash on delivery money belongs to the courier company or its e-commerce clients. If it lands in the same ledger as your commission, your turnover looks inflated, and that can push you towards audit limits you never crossed.
Counting freight as GST turnover in the agency model. Owners sometimes register only because they see Rs 36 lakh of bookings. Check whose invoice the customer gets first.
Ignoring the TDS line. If the company deducted TDS under the wrong PAN or never filed its return, the credit won't show in your Form 26AS. Match it every quarter, not at filing time.
Step-by-Step Guide
Courier Franchise Tax Checklist for the Year
Read your agreement
Find out who issues the AWB and whether the company pays you commission, delivery fees or both.
Work out your own turnover
Add up only what the company pays you (agency model) or what you bill customers (own-invoice model). Register if it exceeds Rs 20 lakh, or if your agreement requires a GSTIN.
Separate COD money
Keep a COD ledger and remit it on schedule. It is not your income.
Keep books
Commission income can't use Section 44AD. Record rent, salaries, fuel and packing with bills.
Reconcile TDS quarterly
Match the company's statement with Form 26AS and AIS. The 2% on commission is your tax credit or refund.
File ITR-3
Claim actual expenses and depreciation on the franchise fee, then claim the TDS.
Source: Notification 15/2025-Central Tax (Rate); Section 22, CGST Act 2017; Sections 32(1)(ii), 44AA, 44AB, 44AD(6), 87A and 194H, Income-tax Act 1961; Section 393(1), Income-tax Act 2025
How Tax Garden helps courier franchise owners
We read your franchise agreement, work out whether you need a GSTIN, and file your GST returns if you do. We keep your books, reconcile the TDS on your commission and file your ITR-3 through our ITR filing service. If you run a transport business too, our guide for truck owners covers the goods carriage side, and pricing shows what each plan includes.
