GST on Transportation

GST on transportation is applicable on goods and on passengers as well, be it via air, road, rail, and all other forms of transport. Transportation is a vital aspect of any economy, as any hindrance in the same has far-reaching effects on the economy. The transport GST rate varies from 0 to 18% and does have an impact on the price of tickets pertaining to all forms of transport. 

There exist 4 primary modes of transportation in India, namely air, rail, road, and sea.

• Air: The quickest form of transport, travel by air does attract certain additional costs, such as duty fees, handling fees, security fees, and taxes.

• Rail: Given that this is a fairly quick mode of transport, it is perfect for the transportation of perishable goods.

• Road: Mainly used for goods that need to be transported within and across states, it is the most common form of transportation in India.

• Sea: When it comes to transporting large consignments of goods, this is the most preferred form of transportation. However, it does take a much longer time to transport goods via waterways.

The GST on transportation charges varies based on each transportation mode, from 0 to 18%. Listed in the sections below are the transport GST rates for various modes of transport.

1. Applicable GST Rate on Air Transport

The GST on transportation charges are revised by the government on a routine basis. Attached below are the current rates for travel via air:

2. Applicable GST Rate on Road Transport

Attached below are the current rates for travel via road:

3. Applicable GST Rate on Water Transport

18% GST will be applicable on rental services of water vessels including freight vessels (whether with or without operator). 

4. Applicable GST Rate on Rail Transport

Attached below are the current rates for travel via rail:

There is a certain list of goods exempted from GST on transportation charges. They include:

• Newspapers and magazines that are registered with the Registrar of Newspapers

• Milk, pulses, flour, salt, rice, food grains

• Defence Equipment

• Agricultural products and produce

• Organic manure

• Relief material in the case of calamities

• Cases where the bill on transportation is less than Rs. 1500

• Household goods

• Goods of unregistered persons

Depending on the goods & services, certain goods and services are exempted from GST, check our detailed article on GST Exemption. 

When it comes to the transportation of goods, it can be undertaken by a Goods Transport Agency (GTA) or by Transport Owners. The GST on transportation charges in such cases varies from 5% to 18%.

A GTA, or a Goods Transport Agency, is one that authorises a ‘consignment note’ and offers services pertaining to the transportation of goods. The GTA acts as a service provider, helping transport the goods via other’s vehicles, and not vehicles of their own. In the case of a transporter, they use their own vehicles to transport goods. A GTA offers a range of services, such as packing, unpacking, loading, unloading, temporary warehouse facilities, and trans-shipment.

When it comes to the transportation of goods, there are two important documents – a consignment note and an eWay bill. A consignment note is a document that is issued by the GTA and acts as proof of goods received for transportation via road. Once the consignment note has been issued, it means that the onus of transporting and delivering the goods to the consignee falls on the transporter. 

 

This document accompanies the goods that are to be transported by road and is often filled out by the shipper. The consignment note also acts like a proof that a contract for carriage has been filed and describes its respective content. It also doubles up as a receipt when goods are picked up from the shipper and delivered to the recipient.

A consignment note should be serially numbered and should have the following information–

 

• Name of consignor and consignee

• Details of the goods

• Registration number of the goods carriage in which the goods are transported

• Place of destination

• Place of origin

• Person liable to pay GST – consignor, consignee, or the GTA.

As per Notification No. 5/2017- Central Tax dated 19/06/2017, any individual who is engaged in only making supplies of taxable goods and/or services on which Reverse Charge Mechanism (RCM) applies is exempt from obtaining registration under GST.

 

Thus, you needn’t register your GTA under GST if you are exclusively transporting goods where the recipient is required to pay the total tax as per the reverse charge basis (even if the turnover exceeds the threshold limit).

Unregistered dealers who are purchasing goods and/or services from unregistered Goods Transport Agencies, they do not have to pay GST under the reverse charge mechanism. If an unregistered dealer hires or makes a purchase from a registered GTA, then the registered GTA will be liable to pay GST.

Any GST-compliant invoice by a GTA must contain following details-

• Name of the consignor 

• Name of the consignee

• Description of service

• Details of goods transported

• Registration number of goods carriage in which the goods are transported

• Gross weight of the consignment

• Details of place of origin and destination

• Signature of the supplier

• GSTIN of the person liable for paying tax whether as consigner, consignee or goods transport agency

• Date of issue

• Whether GST is payable on reverse charge basis

• Name, address and GSTIN (if applicable) of the GTA

• Tax invoice number 

• Taxable value of supply

• Applicable rate of GST

• Tax Amount

The GTA, under Goods and Services Tax norms, also levies a certain charge for the transportation of goods, as elucidated below:

Timely transportation of goods is an essential component to the growth of any economy and essential to maintain the demand and supply chain. It is also an important contributor in rapid industrialisation and growth. While the government has imposed GST on transportation charges, this has a marginal effect on prices, simultaneously helping the government earn revenue.