GST on Transport - GST on Transport of Goods Through Different Modes

Introduction

Transporting goods across India involves not only logistics but also taxes under the Goods and Services Tax (GST). Whether you’re a trader, manufacturer, or logistics provider, the GST you pay (or collect) on freight charges depends on how the goods are transported by road, rail, air, sea, pipeline, or multimodal routes. Given the variety of transport modes and special agency-based services, it’s important to know which GST rate applies, when GST is exempt, and who bears the tax burden (supplier or recipient).

Basics: GST & Transport Services

• GST does not uniformly apply to all transportation of goods; applicability depends on:

  • Mode of transport (road, rail, air, sea, pipeline, waterways)
  • Whether service is provided by a recognized agency under GST definitions (e.g., a Goods Transport Agency / GTA)
  • Whether goods being transported are exempt commodities (e.g., certain agricultural produce, food grains, relief material) or fall under the exempted categories
  • Whether Input Tax Credit (ITC) is claimed - some rates depend on whether the transporter avails ITC.

In GST classification, freight/transportation services fall under SAC/HSN code 9965 (for goods transport services).

Also read: List of HSN codes under GST

GST Rates by Mode of Transport (Goods)

Here’s a breakdown of how GST applies depending on transport mode/service type:

Mode / Service Type

Typical GST Rate / Taxability

Road (non-GTA) - small transporters, trucks not issuing a consignment-note

Exempt / Nil - no GST for plain road goods transport when no GTA / consignment note is involved.

Road via GTA (Goods Transport Agency) - transporter issues consignment note

5% (without ITC) or 12% (with ITC) - if GTA opts for forward charge with ITC.

Rail freight (goods by rail)

5%

Water/Sea / Inland waterways / Vessel transport of goods

Generally, 5% when treated as a goods transport service under SAC 9965.

Multimodal Transport (combination of modes - road + rail + sea, etc.)

12% (6% CGST + 6% SGST) for intra-state; 12% IGST for inter-state.

Air freight (transport of goods by aircraft)

18% (standard rate applied to air cargo/freight services) according to various freight-GST summaries.

Note: These rates apply to transporting “goods” (freight). Passenger transport GST classification is different (SAC 9964) and not covered here.

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Exemptions & Special Cases

GST on transport of goods is not always charged. Exemptions or nil-GST apply in certain scenarios:

• Goods transported by road without involvement of a registered GTA or courier agency - e.g., self-drive, owner-driver trucks not issuing consignment notes - these remain exempt.
• Transport of certain specified goods: agricultural produce, food grains, milk, salt, pulses, organic manure, newspapers/magazines (registered), defence or military equipment, and relief materials for disaster victims - may be exempt when transported by rail, road, or vessel.
• Transport where the total freight charged is very low (some thresholds under older rules) - though with the GST regime, this is less common; still, small consignments often drew special treatment under pre-GST regulations.

Thus, it’s important to check whether transport is via GTA, what the commodity is, and under which mode - before assuming GST applies.

Who Pays GST - Supplier vs Recipient (Reverse Charge vs Forward Charge)

• For GTA services (road transport by a registered agency issuing a consignment note): The GST can be under Forward Charge (GTA pays) or Reverse Charge (recipient pays), depending on the agreement and the GST registration/option exercised.
• For other modes (rail, sea, air, water, multimodal): normally supplied by a registered service provider, so GST is under Forward Charge - the transporter/service provider collects GST and remits.
• If the goods transported are exempt (e.g., agricultural produce), GST may not apply - in that case, no charge, regardless of mode.

For businesses, this distinction matters for claiming Input Tax Credit (ITC) or for proper invoicing and compliance.

Impact of Transport Mode & GST on Cost & Compliance

• Cost to Customer: Using air or sea freight will usually be more expensive (higher base freight + 18% GST) - compared to rail, water, or road + GTA (5-12%). Businesses need to factor freight + GST into pricing or invoices.
• Accounting & ITC: If goods transport involves a GTA and the recipient is GST-registered, choosing the 12% rate (with ITC) may allow them to claim GST input credit - beneficial for businesses. On the other hand, 5% without ITC increases the cost if they want to claim tax input.
• Documentation & E-way Bills: Multi-modal transport or cross-state transport (inter-state) requires proper GST-compliant invoices, waybills, and cargo manifests - non-compliance can result in penalties.
• Supply Chain Strategy: For heavy/bulky goods, rail or water, plus 5% GST, may be cost-effective. For sensitive/faster delivery, air freight with 18% GST might be unavoidable.

What Changed: Multimodal Transport & Simplified GST Rates

Earlier (pre-mid-2018), different legs of a multi-mode transport contract attracted different GST rates depending on each mode (rail, road, sea, etc.), resulting in complexity for logistics providers.

Now, under newer regulations:

• For multimodal transport (i.e., using more than one mode in a single contract), GST is uniformly 12% (with ITC) for intra-state, and IGST 12% for inter-state.
• This simplification helps businesses offering door-to-door logistics (road + rail + sea/air) avoid multiple GST calculations and reduce compliance burden.

However, for pure road transport services where GTA is not involved, transport remains exempt.

Common Misunderstandings & What to Watch Out For

• “All road transport is taxable under GST” - False. Road transport of goods remains exempt if done without a GTA / consignment note. Only services provided by registered GTAs (or courier agencies) are taxable.
• “GST is the same for all transport modes” - False. GST differs by mode: road/GTA (5–12%), rail (5%), water/sea (5%), air (18%), multimodal (12%).
• “GST always applies to freight charges” - Not always. Exemptions exist for certain goods (food grains, agricultural produce, relief materials) and non-GTA transport.
• “ITC is always available if GST is paid” - Not when GTA opts for 5% tax (without ITC). In that case, the transporter cannot claim input credit.

Practical Tips for Businesses & Transporters

1. Identify whether the transporter is GTA - Check if the consignment note is issued; if yes, GST likely applies (5% or 12%). If not, road transport may be exempt.
2. Choose transport mode wisely - For bulky/low-margin goods, rail or water + 5% GST is often cost-effective. For urgent or low-volume consignments, air freight might be justified.
3. Leverage ITC where possible - If you’re GST-registered and transport is by GTA, opting for 12% (with ITC) may reduce net cost.
4. Use multimodal contracts smartly - If logistics involve multiple legs, use a unified 12% GST multimodal service for simplified compliance.
5. Maintain correct invoices/documentation - Especially for multimodal or inter-state transport, GST-compliant invoices and e-way bills are critical to avoid penalties.
6. Check if goods are exempt - Transport for exempt goods (agri, food grains, relief material) may not attract GST - clarify with transporter.

Conclusion

GST on transport of goods in India is not one-size-fits-all. It depends heavily on the mode of transport, whether a registered agency (GTA) is used, the type of goods, and whether Input Tax Credit is being claimed. As a business owner, logistics manager, or transporter, knowing these distinctions helps you avoid overpayment, optimise cost, and maintain GST compliance. From road and rail to air, sea, pipeline or multimodal logistics - each has its own GST treatment, and correct classification ensures smoother invoicing, proper tax handling, and better financial planning.