Freight terms in quotations: ex-works, FOR destination and "freight extra" explained
By Raghav Saxena, founder of AsliRate, former audit associate at KPMG · 22 October 2026 · 2 min read
Short answer
Freight terms say who arranges and pays for transport. Ex-works means you collect from the supplier's premises and pay for transport yourself. FOR destination means the supplier delivers to your location and the price includes freight. "Freight extra" or "to pay" means the supplier sends it but you pay the transport cost. To compare quotes fairly, add the freight to every quote that doesn't include it.
Freight can be the difference between two close quotes, and it is the cost suppliers most often leave vague. Here is what the common terms on Indian quotations mean.
| Term on the quote | Who arranges transport | Who pays | What to add when comparing |
|---|---|---|---|
| Ex-works / ex-factory / ex-godown | You | You | Your transporter's rate, plus your time |
| FOR destination / door delivery | Supplier | Supplier (in the price) | Nothing |
| FOR supplier's city | Supplier, to their local transporter | You, from there | Transport from their city to you |
| Freight extra / to pay | Supplier | You | The freight amount (ask for it) |
| Freight at actuals | Supplier | You, whatever it costs | An estimate, and ask for a cap |
| Nothing written | Unclear | Unclear | Ask before you compare |
GST on freight
When the supplier delivers the goods and bills freight on the same invoice, the freight is usually treated as part of the supply of the goods, so GST applies to it at the goods' rate. If you can claim credit on the goods, you can normally claim it on that freight too.
If you hire a transporter yourself, a goods transport agency (GTA) has its own GST rules, often under reverse charge. Ask your accountant how it applies to you before counting it in your comparison.
How to compare quotes with different freight terms
- Ask every supplier for the freight amount to your location for your quantity.
- For ex-works quotes, get a rate from your own transporter.
- Add freight (before GST) to each quote's goods cost.
- Spread the total over the quantity you need to get a real rate per unit.
In our running example, Supplier A at ₹18 per box with ₹6,000 freight on 5,000 boxes comes to ₹19.20 per box before GST. Supplier B's ₹19.50 includes delivery and GST, and works out cheaper. The full comparison is in the quotation checklist.
Common questions
- What does FOR destination mean in a quotation?
- FOR (free on road) destination means the supplier delivers the goods to your location and the quoted price includes transport to there.
- What does ex-works mean in a quotation?
- Ex-works means the price is for goods collected at the supplier's premises. You arrange and pay for transport yourself.
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