New GST on Freight Charges: Transportation of Goods
- GST on freight charges depends on the type of transportation service and whether the Goods Transport Agency (GTA) opts for forward charge or tax is payable under reverse charge.
- GTA services may attract 5% GST without ITC or 18% GST with full ITC when the GTA opts for forward charge.
- In specified cases, GST on GTA services is payable by the recipient under the reverse charge mechanism, subject to applicable GST provisions.
- Certain transportation services, such as specified essential goods transported by GTA, may be exempt from GST as per applicable exemptions.
- Choosing the 18% GST rate for GTA services allows eligible transporters to claim full input tax credit, subject to GST conditions.
Freight charges are a vital part of transporting goods across the country. Whether you’re a business owner or a logistics provider, understanding gst on freight is essential for proper billing and tax compliance. In this blog, we’ll simplify how GST applies to goods transportation services and which rates apply.
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New GST on Freight / GTA Services in India
Goods Transport Agency (GTA) services continue to have a dual-rate structure after 22 Sep 2025. The earlier 12% GST with ITC forward-charge option has been revised to 18% GST with full ITC. The concessional 5% GST without ITC option continues for GTA services under applicable provisions. In specified cases, GST is payable by the recipient under reverse charge.
A GTA opting for 5% GST without ITC cannot claim ITC on inputs and input services used for that supply, while a GTA opting for 18% GST with full ITC can claim eligible ITC. GST paid by the recipient under RCM may be eligible for ITC, subject to applicable GST conditions.
New GST on Freight / GTA Services in India
The freight charges GST rate depends on whether the Goods Transport Agency (GTA) opts for forward charge or whether GST is payable by the recipient under reverse charge.
| Service Type | New GST Rate (After 22 Sep 2025) |
Old GST Rate (Before 22 Sep 2025) |
Input Tax Credit (ITC) |
|---|---|---|---|
| GTA charging GST (forward charge - standard) | 18% | 12% | Allowed in full |
| GTA charging GST (forward charge - concessional) | 5% | 5% | Not allowed to GTA on inputs and input services used for this supply |
| Recipient pays GST under reverse charge (RCM) | 5% | 5% | Recipient can generally claim ITC of tax paid under RCM, subject to normal conditions |
Service Type
New GST Rate
(After 22 Sep 2025)
Old GST Rate
(Before 22 Sep 2025)
Input Tax Credit (ITC)
Service Type
New GST Rate
(After 22 Sep 2025)
Old GST Rate
(Before 22 Sep 2025)
Input Tax Credit (ITC)
Service Type
New GST Rate
(After 22 Sep 2025)
Old GST Rate
(Before 22 Sep 2025)
Input Tax Credit (ITC)
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.
Is GST Applicable on Freight Charges?
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 a GTA service, and different tax rules may apply.
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Who Pays GST on Freight Charges?
- If the recipient is a registered business, they may have to pay GST under Reverse Charge Mechanism (RCM) .
- If the GTA opts to pay GST, then the recipient does not need to pay under RCM.
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Freight Charges in GST Invoice
- Included in the product price: GST is applied on the total invoice.
- Shown separately: GST is charged on freight as a separate service.
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.
GST Exemption for Transport of Certain Goods
Some goods are exempt from GST when transported by road by a GTA. In such cases, no GST is charged on the freight cost. These include: milk, salt, fruits and vegetables, food grains and pulses and relief materials for natural disasters
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How to Calculate GST on Freight / GTA Services
GST on freight charges or GTA services is calculated on the taxable freight amount charged for transportation. The applicable rate depends on whether the supply is billed under forward charge or reverse charge, and whether the GTA chooses the 18% GST with ITC option or the 5% GST without ITC option.
GST Amount = Freight Value × GST Rate
Total Invoice Value = Freight Value + GST Amount
Example 1: GTA charging 18% under forward charge
Suppose the freight amount is Rs 20,000.
GST = 20,000 × 18% = Rs 3,600
Total Invoice Value = 20,000 + 3,600 = Rs 23,600
This applies where the GTA chooses the 18% forward charge option with eligible ITC.
Example 2: GTA charging 5% under forward charge
Suppose the freight amount is Rs 20,000.
GST = 20,000 × 5% = Rs 1,000
Total Invoice Value = 20,000 + 1,000 = Rs 21,000
This applies where the GTA chooses the 5% concessional forward charge option. Under this route, ITC on inputs and input services used for that supply is not available to the GTA.
Example 3: Recipient paying 5% under reverse charge
Suppose the freight amount is Rs 20,000 and GST is payable by the recipient under RCM.
GST = 20,000 × 5% = Rs 1,000
Total amount payable by recipient = 20,000 + 1,000 = Rs 21,000
GST of Rs 1,000 is paid separately by the recipient under RCM.
If the freight service is used for taxable business purposes and the normal GST conditions are met, the recipient can generally claim ITC of the tax paid under RCM.
Input Tax Credit (ITC) on Freight GST
- 18% GST (forward charge): Input Tax Credit is allowed to eligible GTA under applicable conditions.
- 5% GST (forward charge): No ITC is allowed to GTA on inputs and input services used for that supply.
- 5% GST (RCM): The GTA does not claim ITC under the 5% option. The recipient paying GST under RCM may claim eligible ITC, subject to applicable GST conditions.
So, choosing 18% GST under forward charge allows the GTA to avail eligible ITC.
Conclusion
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.
