The GST rates on road, rail, and air transportation of goods and passengers range from 0% to 18%. The imposition of GST rate on transportation services, including air, road, and rail travel, has not substantially affected ticket pricing. Furthermore, when transportation services are subject to GST, input tax credit (ITC) availability may not always be relevant. We shall examine several aspects of applying GST rate for transportation of goods and passengers in the following sections.
Goods Transportation in India
Road transport of products is classified as a taxable service under India’s Goods and Services Tax (GST) regime. Road-based goods transportation is subject to a different GST rate on transportation services dependent on the kind of service provider.
Goods Transport Agencies (GTAs) services are 12% taxed and classified as “Transport of Goods by Road” under the GST. In essence, GTAs provide consignment note issuance and services associated with road-based goods transportation.
Nevertheless, if a GTA fails to provide a consignment note, it is deemed an “Other Services” category, liable to an 18% GST on transport, rather than a Goods Transport Agency.
Overview of GST on Transport
There are four main ways to move things around in India: by train, by air, by sea, and by road.
- Since rail transit is comparatively quick, it’s especially useful for perishable commodities. You can obtain rail haulage through a terminal operator, third-party logistics provider, or freight company.
- Air travel is the fastest choice for quick, long-distance travel. But because it incurs additional expenditures like taxes, handling fees, duty, and security fees, it’s a somewhat expensive means of transportation.
- Water transportation is an excellent option if you want to move heavy loads in an affordable manner. However, in comparison with the other means of transportation already described, it often moves more slowly and offers less flexibility.
- Lastly, the most popular way for transferring commodities between and among states is via road. Usually, it is used for the flexible and quick transportation of commodities across short or vast distances. Its frequent usage is further facilitated by the fact that, when combined with the above modes of transportation, it frequently acts as both the first and last leg of transit to convey commodities to their final destinations.
GST Rates for the Transport Sector
GST rate on transportation services fluctuate according to the mode of transportation. Provided below is a concise overview of the GST rates that apply.
GST on Air Transport
The following are GST rate on transportation services concerning the air transport:
| Particulars | Rate of GST |
| Economy Class Tickets | 5% |
| Tickets of chartered flights for the purpose of pilgrimage | 5% |
| Business class air tickets | 12% |
| Rental GST on transport services of aircraft (with or without operator)/chartered flights | 12% |
GST on Road Transport
When it comes to road transport, the GST rate on transportation services that applies is contingent on the specific mode of transportation selected. Here are a few typical examples of such modes and the corresponding GST rates.
| Particulars | Rate of GST |
| Public Transport for passengers | NIL |
| Transport through metered auto rickshaw, e-rickshaw or taxi | NIL |
| Transport through Non-AC Contract Carriage or Stagecoach | NIL |
| Transport through AC Contract Carriage or Stagecoach (without Input Tax Credit) | 5% |
| Transport through radio taxi and similar other services | 5% |
| Transport through rental services for cars, buses, coaches, | 18% |
GST on Rail Transport
GST rate on transportation services is imposed on passenger tickets for rail transport, and the type of tickets purchased determines the applicable rate.
| Particulars | Rate of GST |
| AC and First-Class Train Tickets | 5% |
| Sleeper and general class tickets | 5% |
| Metro Tickets or Tokens | 12% |
Exemptions for GST on Transport
Certain goods are exempt from GST on transportation charges. These include:
- Magazines and newspapers registered with the newspaper’s Registrar
- Essential food items like pulses, milk, flour, rice, salt, and food grains
- Agricultural produce and products
- Defence equipment
- Organic manure
- Cases where the transportation bill is less than Rs. 1500
- Relief materials for calamities
- Household goods
- Goods from unregistered individuals.
Specific items are exempted from GST rate on transportation services depending on the nature of the goods and services involved. You can find more information in our comprehensive article on GST exemption.
What is Meant by the Good Transport Agency (GTA) in GST?
A GST on goods transport agency that authorises a “consignment note” and provides services related to the transportation of commodities is known as a goods transport agency, or GTA. As a service provider, the GTA assists in moving the products using other people’s cars rather than their own. When a transporter moves products, they do it using their own vehicles. A GTA provides a variety of services, including transhipment, temporary warehousing facilities, loading, unloading, and packaging and unpacking.
What are Consignment Notes and e-way Bills?
Two main documents are involved when products are transported: consignment notes and e-way invoices. When items are transported by road, a goods transportation agency (GTA) will provide a consignment note in place of a receipt for the commodities.
It is necessary to create an e-way Bill before the transportation of goods. It is a crucial document for guaranteeing adherence to GST regulations and must be created via the official e-way Bill Portal. All GST-registered people and businesses who carry products by road from one location to another must have an e-Way bill.
Conclusion
In summary, a GTA may charge 13% or 5% goods transport agency under GST of the total amount due on July 17, 2022, based on a forward charge. The input tax credit was available only in cases where 12% GST was levied. The designated service user was required to pay a 5% GST based on the reverse charge, and the GTA was not eligible for an input tax credit.
However, it should be emphasised that the service recipient will be eligible for the input tax credit in each of the aforementioned situations. However, the remaining various requirements for the input tax credit are met.
FAQs
1. What is the GST rate for a transport company?
Road vehicle rental services, which include the rental of trucks, freight aeroplanes, and waterboats used for freight, are subject to an 8% GST.
2. What effect does GST have on input tax credits?
The GST on transport that applies when a Goods Transport Agency (GTA) applies for an input tax credit is 12% in this case; when the input tax credit is not used, the GST rate that applies is 5%.
3. Is it possible for us to claim GST on items transported?
You can request GST reimbursement as an input tax credit (ITC) on your flight for any business journey. In addition, airlines may submit an ITC claim for input services pertaining to customers travelling in economy class. Airlines are able to claim In-Capacities (ITC) for a range of costs when travelling in business class, including meals and replacement components, but not gasoline.