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goods transport agency under gst

Goods Transport Agency Under GST (Guide 2023)

Transportation is the movement of people or goods from one place to another. Transportation is an important part of the economy, as any transportation interruption disrupts entire business channels. There are multiple GST rates from zero to 18% for GST on the transportation of goods and people by road, rail, and air. Let’s take a look at RCM on GTA, goods transport agency under GST, and rates applicable.

What is RCM on transport?

RCM applies to GST services and GTA services are nothing more than consignment carriers that provide transportation services for the transportation of goods and issue consignment notes for that purpose.

A Goods Transport Agency or GTA means a person who provides the service of transporting goods by road and issues a consignment note for that service.

What are the 4 basic modes of transportation?

India has four main modes of transport: air, rail, road, and water.

 Air:  Airplanes are the fastest way to travel and have certain additional costs such as Duties, handling and security fees, and Taxes.

Rail: It’s a relatively fast mode of transport, so it’s ideal for transporting perishables.

Road: Used for goods that need to be transported within and between states, it is the most common mode of transport in India.

Water: This is the preferred mode of transport when it comes to transporting large quantities of goods. However, transporting goods through waterways takes much longer.

Which transportation is exempt from GST?

The following are exempt from paying GST under the RCM:

Exempt Transportation in GST
  • Transportation of agricultural products
  • Transportation of grains such as milk, salt, rice, flour, and legumes
  • Transportation of organic fertilizers
  • Transport of newspapers or magazines registered with the Registrar of Newspapers
  • Transportation of relief goods to victims of natural disasters, man-made disasters, disasters, accidents and breakdowns
  •  Transportation of defense or military equipment
  • Transport of goods not exceeding INR 1,500 in total value for the transport of goods carried in a single carriage
  • The transport of goods where the consideration for the transportation of all goods does not exceed INR 750 for a single consignee

What is the rate of GST on transportation charges?

GST rates in the transportation sector vary depending on the mode of transport. Below is a summary of the applicable GST rates.

GST on Air Transport

Economy Class Tickets5%
Air tickets for charter flights for pilgrimage5%
Business class air tickets12%
Aircraft rental services (with or without operator)/charter flights12%

GST on Road Transport

Below are some common examples of such modes of transport and some of the GSTs charged on them.

Public Transport for passengersNIL
Transport through metered auto rickshaw, e-rickshaw or taxiNIL
Non-AC contract transportation or stagecoach transportationNIL
Transportation by AC contract transportation or stagecoach (no input tax credit)5%
Transport through radio taxi and similar other services5%
Transport through rental services for cars, buses, coaches18%

GST on Rail Transport

The amount of GST for rail transport is charged on the ticket and the rate varies on the type of ticket purchased.

AC and First Class Train Tickets5%
Sleeper and general class tickets5%
Metro Tickets or Tokens12%

What is the applicability of reverse charge a mechanism (RCM)?

Reverse Charge Mechanism will apply to Goods Transport Agency Services if all of the following conditions are met:

  1. Service provider is a Goods Transport Agency who do not pay the 6% central tax
  1. The service receiver is any of the following person/agencies
  •  factory (registered under the Factories Act, 1948),
  • A co-operative society,
  • A society registered under the Society Registration Act, 1860 
  • A person registered under any of the following Act-
    • Central Goods and Services Tax Act;
    • Integrated Goods and Services Tax Act;
    • State Goods and Services Tax Act;
    • Union Territory Goods and Services Tax Act.
  • A body corporate,
  • A partnership firm including an association of persons 
  • A casual taxable person.

The designated service recipients are located in taxable jurisdictions. In the case of delivery of goods, the transport costs are borne by the supplier of the goods (ie consignor) or the recipient of the goods (ie consignee), depending on the conditions.

ParticularsPerson liable to pay GST on reverse charge basis
When transportation cost is paid by the consignor (i.e., consignor pays GTA)The consignor is treated as a recipient of service. If the consignor is one of the specified service receivers (listed above), then the consignor must pay GST on shipping charges
When transportation cost is paid by the consignee (i.e., consignee pays GTA)The consignee is treated as a service receiver. If the consignee is one of the specified service receivers (listed above), then the consignee must  pay GST on shipping charges

What is a consignment note?

A consignment note is a document issued by the Goods Transport Agency (GTA) on the receipt of goods  transferred to the consignee. These goods are transported by road. The details included in the consignment note are,

  • Consignor name
  • Consignee name
  • Details of goods transported
  • Place of destination
  • Place of origin
  • Registration number of the carriage of the goods that transports goods
  • Serial number
  • Taxation of the consignor, consignee or GTA

What is e way bill?

The eWay bill is a bill that must be generated before the transportation of goods. 

An E-way bill is an important document created on the official portal for such invoices. This document is mandatory document for transporting goods between any location, inside or outside the state. All GST-registered individuals and businesses that transport goods by road between these locations are required to comply with this requirement.

What is applicability of RCM on unregistered transporter?

Any products or services that a registered person purchases from an unregistered person require that the registered person pay GST on a reverse charge basis. If the intra-state supplies of services or both are received by a registered person from an unregistered provider and do not exceed Rs. 5,000 per day, they are exempt from GST. The duty to pay tax on RCM is therefore waived if a total purchase from an unregistered person is less than Rs. 5,000 in a single day.

Is RCM applicable to transportation of passengers?

If a non-body corporate entity rents a vehicle for passenger transport and provides services to a corporate entity, it is liable to pay GST under the reverse charge procedure. The recipient (entity) of the service in this situation is responsible for paying taxes in accordance with the RCM. 

Frequently Asked Questions (FAQs)

What is HSN code for transport service?

The HSN code for Goods Transport Services is 9965.

Is GST registration mandatory for goods transport agencies?

GTA does not need to register under GST if it only transports goods for which the consignee pays all taxes under reverse charge (even if the turnover exceeds the threshold).

Does GST apply to public transport?

Transportation of passengers through non air-conditioned carriages is exempt from GST. GST applies to travel in air-conditioned public buses.

Can we take ITC on the transportation of goods?

GTA Service Provider is not entitled to charge his ITC for inputs received where a 5% tax is applicable.

Is RCM applicable to unregistered transporter?

RCM applies to unregistered purchases for only a finite list of supplies.

Wrapping Up

Transportation of goods is an essential factor in the growth of any economy, contributing to rapid industrialization and growth. The government imposes her GST on shipping charges, but this has little impact on prices and also contributes to government revenue.

Input Tax Credit under GST with Examples (Unlimited Guide)

Maximum Time Limit For Claiming ITC Under GST

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