Moving goods from point A to point B involves more than just a truck and a driver; it involves a bit of tax math, too. In the world of GST, freight is simply the cost of transporting goods. Whether you're sending a small parcel via a courier or moving tons of raw material across state lines, there’s usually a GST tag attached.

Following the GST 2.0 reforms effective from September 22, 2025, the rules have been simplified to reduce confusion. The big question remains: Who is responsible for paying that tax to the government? Sometimes it’s the transporter, and sometimes it’s you (the person paying for the service).

What is the GST Rate on Freight?

The rate depends entirely on how the goods are being moved and the status of the transporter. Following the recent 2025 updates, the rates have been streamlined:

GST Rate Card by Mode of Transport (2025-26)

Mode of Transport

GST Rate

Why the difference?

Road (Trucks/GTA)

5% or 18%

5% if the transporter doesn't claim tax credits; 18% (revised from 12%) if they opt for full ITC.

Railways

Standard for most goods moved by Indian Railways.

Air Freight

18%

Domestic air cargo is considered a premium service and attracts the standard rate.

Ocean (Sea)

Usually applies to imports (as IGST) under reverse charge.

Courier Services

18%

Private door-to-door services are taxed at the standard rate.

The Essential Exception: If you are moving necessities like milk, salt, rice, or organic manure, the GST rate is 0% (Exempt). The government doesn't want to tax the transport of your daily meals!

Open Demat account - Start investing with a quick setup

Who is liable to pay the GST?

In most business deals, the seller collects tax from the buyer. But in transport, it often works backward. This is called the Reverse Charge Mechanism (RCM).

Scenario A: You pay the tax (Reverse Charge - RCM)

This is very common when dealing with Goods Transport Agencies (GTA). If you are a registered business, a factory, or a partnership firm, the transporter might not charge you GST on their bill. Instead, you calculate the 5% tax yourself and pay it directly to the government.

Scenario B: The Transporter pays the tax (Forward Charge - FCM)

Larger logistics companies often prefer this. They include the GST in their bill, collect it from you, and handle the payment to the government. Under the 2025-26 rules, GTAs can opt to pay 18% GST to claim full Input Tax Credit (ITC) on their trucks and fuel.

The GTA Rule: Road Transport

In India, a truck operator who issues a Consignment Note is a Goods Transport Agency (GTA).

5% Rate (Without ITC): This is the default. Usually, the recipient pays this via RCM. The transporter cannot claim credits for their own expenses (like tires or spare parts).
18% Rate (With ITC): The transporter charges this directly on their invoice. They get to claim tax credits on all their business costs, which is why many larger firms switched to this after the 2025 rate rationalization.

When is Freight Tax-Free?

Not every shipment needs a GST payment. Here is the Free List for 2025-26:

Small Shipments: If the total freight for a single truck is less than ₹1,500, or if a single person’s goods in that truck cost less than ₹750.
Agriculture: Moving pulses, flour, fruits, vegetables, and milk.
Defense: Moving military equipment or relief materials for disasters.
Exports: Generally, sending goods out of India via sea or air remains exempt (0%) to keep Indian exports competitive.

Summary Table: At a Glance

Question

Answer

Standard Road Rate

5% (Mostly RCM) or 18% (FCM with ITC)

Standard Air Rate

18% (Always FCM)

Rail Rate

5% (Standard)

Can I claim credit?

Yes, if you pay 5% RCM or 18% FCM, you can usually claim it back as ITC for your business.

Conclusion

The rules for GST on freight are designed to be flexible. If you’re a small business, the 5% RCM route is often the simplest and cheapest. For larger companies, paying the 18% Forward Charge to a transporter who handles the compliance is often worth the convenience. Just remember to always check your Consignment Note: without that document, the service might not be considered a GTA service, and the tax rules could shift!

Frequently Asked Questions (FAQs)

Do I have to pay GST if I hire a local tempo?

If the driver doesn't issue a Consignment Note, they aren't a GTA. In most cases, these small, unorganized moves are exempt from GST.

What if I am not registered for GST, but I hire a truck?

If you are an individual (not a business) and not registered, you generally don't have to pay tax under RCM. The burden falls on the transporter to be exempt or pay under FCM.

Is GST applicable to loading and unloading?

Yes. If the transporter bills these together with the freight, the entire amount is taxed at the freight rate (e.g., 5% or 18%) as a Composite Supply.

Can I claim Input Tax Credit (ITC) on freight?

Yes! If you use the transport for your business, you can claim the GST you paid back, provided you have a valid tax invoice.

Is an E-way bill required for every load?

Only if the value of the goods inside the truck is more than ₹50,000.

What happens if I move my household items?

Personal house shifting is generally exempt from GST, unless done via a commercial packer and mover who charges it as a service.

Why is air freight taxed at 18%?

Air transport is categorized as a standard service rather than an essential one, placing it in the higher 18% bracket.

Do I pay GST on fuel surcharges?

Yes. Fuel surcharges are part of the Value of Supply and are taxed at the same rate as the base freight.

Is the 12% rate still available for GTAs?

No, as part of the GST 2.0 reforms in late 2025, the 12% slab was largely merged into the 18% slab for those wanting full ITC.

What is the HSN code for freight?

The code you will see is usually 9965 for road/rail/water transport.

/content/mofsl-website-adobe/fragments/pf-disclaimer