Freight charges are a vital part of transporting goods across the country. Whether you’re a business owner or a logistics provider, understanding the gst on freight charges is essential for proper billing and tax compliance. In this blog, we’ll simplify how GST applies to goods transportation services and what rates are applicable.
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for goods transport by road (GTA) and related freight billing options.
Service Type | New GST Rate | Input Tax Credit (ITC) |
---|---|---|
GTA charging GST (forward charge — standard) | 18% | Allowed (full ITC) |
GTA charging GST (forward charge — concessional) | 5% | Restricted (no ITC to GTA on inputs/input services for this supply) |
Recipient pays GST (reverse charge mechanism — RCM) | 5% | Yes, to recipient (ITC of RCM tax, subject to normal conditions) |
Notes: The earlier 12% option is rationalised into 18% (with ITC). The 5% concessional route remains with restricted ITC. RCM at 5% continues, with ITC available to the recipient when used for taxable business supplies.
Yes, GST is applicable on freight charges when the service is provided by a Goods Transport Agency (GTA). A GTA is any person or business that provides transport services in goods carriages and issues a consignment note.
If there is no consignment note issued, the service is not treated as GTA service, and different tax rules may apply.
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Service Type | GST Rate | Input Tax Credit (ITC) |
---|---|---|
GTA charging GST (forward charge) | 12% | Allowed |
GTA charging GST (forward charge, optional) | 5% | Not allowed |
Recipient pays GST (reverse charge mechanism) | 5% | Recipient cannot claim ITC |
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If you’re a seller arranging transportation and billing your customer for freight separately, you must apply the applicable freight charges gst rate on that amount.
Some goods are exempt from GST when transported by road by a GTA. These include:
In such cases, no GST is charged on the freight cost.
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So, choosing 12% GST under forward charge is better if the transporter wants to avail of ITC.
Understanding the gst on freight charges helps businesses stay compliant and manage costs efficiently. Whether you’re charging your customer for freight or paying a transporter, knowing the correct freight charges gst rate and who’s liable to pay makes all the difference.