Charging a COD Fee in India: Rules, Typical Amounts and Effect on RTO

Is it legal to charge a COD fee in India?#

Yes: no Indian rule bans or caps a COD fee, but the rules require you to disclose it upfront with the rest of the price. The government is watching COD charges closely, so treat disclosure as the minimum.

What the E-Commerce Rules require#

A brand that sells its own stock on its own website matches the rules' definition of an "inventory e-commerce entity". Three duties in the Consumer Protection (E-Commerce) Rules, 2020 apply to a COD fee:

• Rule 7(1)(c): show information on the available payment methods, including "any fees or charges payable by users".
• Rule 7(1)(e): show the "total price in single figure", with a breakup of "all the compulsory and voluntary charges, such as delivery charges, postage and handling charges, conveyance charges and the applicable tax".
• Rule 4(9): record a shopper's consent only through "an explicit and affirmative action", never automatically or through pre-ticked checkboxes.

Sellers on a marketplace have the same total-price duty under Rule 6(5)(b). The marketplace itself must show payment-method fees under Rule 5(3)(d).

What the dark-pattern guidelines add#

Show the fee early, because a late reveal is what the guidelines target. The Central Consumer Protection Authority (CCPA) issued the Guidelines for Prevention and Regulation of Dark Patterns, 2023 on 30 November 2023. They list 13 dark patterns and apply to platforms, advertisers and sellers. Two matter for a COD fee:

• Drip pricing: elements of the price "are not revealed upfront or are revealed surreptitiously within the user experience". It also covers charging "an amount higher than the amount disclosed at the time of checkout".
• Basket sneaking: adding items or payments at checkout without the shopper's consent. The guidelines exclude "necessary fees disclosed at the time of purchase", such as delivery charges.

What the government has said about COD charges#

The government has spoken about COD charges directly, and has since fined a platform for fees revealed late. In October 2025, Consumer Affairs Minister Pralhad Joshi said his department had received complaints against platforms "charging extra for Cash-on-Delivery, a practice classified as a dark pattern that misleads and exploits consumers". He said a detailed investigation had begun. The complaints cited line items such as "payment handling fee" and "offer handling fee".

In December 2025, the CCPA fined Zepto ₹7 lakh for drip pricing and basket sneaking, after mandatory fees surfaced late in the purchase flow. It directed Zepto to disclose all charges upfront, at the start of the user journey. MediaNama reported that the CCPA also treated charges taking the final amount above the declared MRP as a breach of the Legal Metrology (Packaged Commodities) Rules, 2011. Zepto has challenged the order before the National Consumer Disputes Redressal Commission.

From 1 January 2027, the Consumer Protection (E-Commerce) (Amendment) Rules, 2026 require every e-commerce entity to comply with the 2023 guidelines. Each must also run a yearly self-audit for dark patterns and display a certificate of compliance. Include your COD fee display in that audit.

Where the rules are silent#

None of these texts mentions COD fees by name. They don't ban a disclosed COD fee, cap its amount or say that disclosure alone makes it safe. The amendment notified on 9 September 2026, the latest change to the rules, doesn't mention COD fees either. The minister's October 2025 statement doesn't say whether a clearly disclosed fee is acceptable. If your products carry an MRP, check with a consumer-law adviser before adding a fee that takes the amount paid above it.

How to show a COD fee at checkout#

1. Name it plainly: "Cash on delivery fee: ₹39".
2. Show it before checkout, on the product page or cart, next to COD availability for the shopper's pin code.
3. Show it again as a separate line when the shopper picks COD, with the new total as one figure.
4. Let the shopper choose COD. Never pre-select it or add the fee by default.
5. Keep the amount identical in the order confirmation, the invoice and the courier record, so the courier collects exactly the total shown at checkout.

How much do Indian D2C brands charge for COD?#

₹39 per order is typical among brands that charge a COD fee, and only about 33.5% of Indian D2C brands charge one. These benchmarks come from ProfitBox360 research, 2025 (client data and shopper surveys).

The last row is ₹39 ÷ ₹850 × 100 = 4.6%.

Large e-commerce platforms charge much less. In October 2025, Forbes India reported that they were charging ₹5 to ₹10 extra for COD orders.

What ₹39 covers on an average COD order#

A ₹39 fee recovers a little over half of what COD handling and RTO cost you at benchmark rates. The inputs are the ₹850 average COD order, a 24.3% COD RTO rate and a courier COD charge of 1.8% of the amount collected. The RTO cost is ₹172.50 per RTO shipment, covering forward freight, return freight and handling.

• Courier COD charge on a delivered ₹850 order: 1.8% × ₹850 = ₹15.30
• COD handling and RTO cost per COD order shipped: 75.7% × ₹15.30 + 24.3% × ₹172.50 = ₹11.58 + ₹41.92 = ₹53.50
• RTO parcels never pay the fee, and the courier's 1.8% takes ₹0.70 of it, so you keep 75.7% × ₹38.30 = ₹28.99 per COD order shipped
• Share recovered: ₹28.99 ÷ ₹53.50 × 100 = 54.2%

Set your own amount#

Start from your own COD costs, then pick one flat fee and test it.

1. Put your own rates into this formula: COD handling and RTO cost per COD order shipped = delivered rate × courier COD charge + RTO rate × RTO cost.
2. Decide what the fee is for: recovering that cost, pushing shoppers to pay online, or both. A prepaid discount is the other common lever.
3. Use a flat rupee amount. It's easier to show as one clear line than a percentage.
4. Test the fee on your own store before you keep it, using the measures in the next section.

What changes when you add a COD fee?#

Expect fewer COD orders, slightly fewer orders overall and fewer RTOs. COD share fell about 13.3 percentage points, checkout conversion about 5.1% and COD RTO about 6 percentage points.

The conversion figure is a relative change: for every 1,000 orders before the fee, expect about 949 after it.

Why conversion and RTO both fall#

Some shoppers leave rather than pay the fee. In the ProfitBox360 shopper survey, 2025 (5,000 Indian shoppers), 23% of those who abandoned a cart named a COD fee as a reason. That's slightly more than the 18% who left because COD wasn't available.

The fee puts off many low-intent buyers, who are the most likely to refuse a parcel at the door. Others switch to paying online. Both effects cut COD RTO.

Worked example: a ₹39 fee on 1,000 orders a month#

A fee like this can lift monthly contribution even after the lost orders, as long as COD RTO really falls.

Illustrative example: a store takes 1,000 orders a month at the benchmark mix, adds a ₹39 COD fee and sees the average changes.

• Before the fee: 625 COD orders at ₹850 and 375 prepaid orders at ₹1,250
• After the fee: orders fall 5.1% to 949, and COD falls 13.3 points to 49.2% of orders, so 467 COD and 482 prepaid
• Assumption: all 51 lost orders were COD buyers, and the 107 buyers who switch to prepaid keep their ₹850 basket
• COD RTO falls from 24.3% to 18.3%; prepaid RTO stays at 2.8%
• Assumption: product and packaging cost 40% of order value, and returned stock can be resold
• Forward shipping ₹61.50 per shipment; RTO cost ₹172.50 per RTO shipment; courier COD charge 1.8% of the amount collected; payment gateway fee 2.1% of order value on every prepaid shipment
• GST on sales and on the fee is left out

Start with what a COD order earned before the fee:

• If delivered: ₹850 − ₹340 product − ₹61.50 shipping − ₹15.30 COD charge = ₹433.20
• Average per COD order shipped: 75.7% × ₹433.20 − 24.3% × ₹172.50 = ₹327.93 − ₹41.92 = ₹286.01

Now add the four changes:

1. Fee income. At 18.3% RTO, 467 COD orders give 85 RTOs and 382 deliveries. Each delivery pays ₹39, less ₹0.70 extra courier charge (1.8% × ₹39), so you keep ₹38.30. 382 × ₹38.30 = ₹14,630.60
2. Fewer RTOs. At the old 24.3%, those 467 orders would give 113 RTOs, so 28 more parcels are now delivered. Each earns ₹433.20 and saves ₹172.50, or ₹605.70. 28 × ₹605.70 = ₹16,959.60
3. Lost orders. 51 COD orders × ₹286.01 = −₹14,586.51, or ₹43,350 of sales
4. Switches to prepaid. A ₹850 order paid online earns ₹850 − ₹340 − ₹61.50 = ₹448.50 if delivered. Per shipment, that's 97.2% × ₹448.50 − 2.8% × ₹172.50 − ₹17.85 gateway fee = ₹435.94 − ₹4.83 − ₹17.85 = ₹413.26. The gain per switch is ₹413.26 − ₹286.01 = ₹127.25, so 107 × ₹127.25 = ₹13,615.75

The RTO line and the lost-orders line decide the result. If your COD RTO doesn't fall, or you lose far more than 51 orders, the gain shrinks quickly. If the buyers who leave were the ones most likely to refuse delivery, each lost order costs you less than ₹286.01.

Read your own result#

Compare the weeks after the change with the same number of weeks before it:

• COD share of orders
• Conversion rate = orders ÷ sessions × 100
• COD RTO rate = COD RTO shipments ÷ COD orders shipped × 100
• Contribution after product, shipping, COD charges and RTO costs, built from the same four lines as the worked example

FAQ#

What should the COD fee be called at checkout?#

Call it "Cash on delivery fee" and show the rupee amount, for example "Cash on delivery fee: ₹39". A plain name helps you meet the E-Commerce Rules' duty to show payment-method fees clearly. The October 2025 complaints about COD charges to the Department of Consumer Affairs cited line items such as "payment handling fee" and "offer handling fee".

Can the courier collect a COD fee that wasn't shown at checkout?#

No. Charging more than the amount disclosed at checkout matches the definition of drip pricing in the CCPA's 2023 dark-pattern guidelines. If the fee wasn't in the checkout total, the courier should collect only that total. Fix the checkout display first, then start charging the fee on new orders.

Should the COD fee be refunded when an order is returned?#

Refund it when the return is your fault, such as a wrong or damaged item, and say clearly whether you keep it on other returns. The E-Commerce Rules require accurate refund information to be shown clearly, so write your COD fee rule into the refund policy and the checkout page.

Is a COD fee better than a prepaid discount?#

Choose the COD fee when COD RTO is your biggest cost. It cut COD share by about 13.3 percentage points, against an 11.3-point rise in prepaid share after a typical 5% prepaid discount. The fee also earns money, while the discount costs ₹62.50 on every ₹1,250 prepaid order. Watch conversion, which fell about 5.1%.

Should repeat customers pay the COD fee?#

Waive it for repeat buyers if RTO is the main reason you charge it. A repeat buyer's COD order comes back about 15% of the time, half the 30% rate for first-time COD buyers. Show the waiver openly at checkout, so every shopper sees the exact price that applies to them before ordering.

How long should a COD fee test run?#

Run it for at least four weeks of orders, then wait until every COD order shipped in that period has been delivered or returned. Reading RTO earlier undercounts parcels still in transit. Avoid festive sale weeks, when COD RTO rises to about 30.8%, and compare against the four weeks before the fee.