GST rates for transportation vary, affecting logistics, passenger, and freight services. Understanding these rates is crucial for businesses and consumers involved in the transport sector.
Latest Updates on Goods Transport Agencies – 50th GST Council Meeting
At the 50th GST Council meeting held on October 4, 2023, the Council made the following decisions related to GTAs:
- Extended Deadline for GST Payment: The deadline for GTAs to submit their GST payment was extended from March 31, 2023, to May 31, 2023.
- Input Tax Credit: The Council clarified that GTAs can claim input tax credit (ITC) on all goods and services used to provide transport services, regardless of whether they pay GST at 5% or 12%.
- Reverse Charge Mechanism: The Council decided to continue the reverse charge mechanism for GTAs that do not avail of ITC. Under the reverse charge mechanism, the recipient of the GTA’s services is liable to pay GST instead of the GTA.
GST Rate for Transportation
The GST rate for transportation services varies depending on the mode of transport and whether the Goods Transport Agency (GTA) avails of input tax credit (ITC).
Road Transport:
- GTAs opting for ITC: 12% GST
- GTAs are not opting for ITC: 5% GST.
Air Transport:
- Rental services of freight aircraft (with/without operator): 18% GST
Supporting services in transport:
- 9% SGST (cumulative effective rate of 18%)
GST on Transport
GST is levied on the value of transportation services provided by Goods Transport Agencies (GTAs). The taxable value of the transport service is determined as the difference between the gross amount charged by the GTA and any amount paid for the hire of the vehicle or any other charges paid to the owner or operator of the vehicle. For businesses involved in transportation services and dealing with GTAs, ensuring GST registration online can streamline compliance processes and facilitate accurate reporting and payment of GST on these services.
Transport Charges HSN Code
The HSN code for transport charges is 9965. This code covers a wide range of services, including road transport, air transport, supporting services in transport, and rental services of freight aircraft.
Transportation in India
India has a vast network of roads, railways, and waterways, making it one of the most transport-dependent countries in the world. The transport sector plays a vital role in the Indian economy, contributing to GDP growth, employment creation, and poverty reduction.
The Indian government has implemented a number of policies to promote the development of the transport sector, including infrastructure development, tax incentives, and regulatory reforms.
India’s transport sector is facing several challenges, including congestion, pollution, and lack of investment. The government is working to address these challenges through a number of initiatives, such as the Smart Cities Mission and the National Highways Development Program.
Wondering how to calculate GST percentage? Use our online GST calculator India for accurate results.
GST on Transport of Passengers by Air
GST is levied on the value of transportation services provided by airlines. The taxable value of the transport service is determined as the difference between the gross amount charged by the airline and any amount paid for the hire of the aircraft or any other charges paid to the owner or operator of the aircraft.
The GST rate for the transport of passengers by air is 5%.
GST on Transport of Passengers by Rail
GST is levied on the value of transportation services provided by railways. The taxable value of the transport service is determined as the difference between the gross amount charged by the railway and any amount paid for the hire of the carriage or any other charges paid to the owner or operator of the carriage.
The GST rate for the transport of passengers by rail is 5%.
GST on Road Transport of Passengers
GST is levied on the value of transportation services provided by road transport operators. The taxable value of the transport service is determined as the difference between the gross amount charged by the road transport operator and any amount paid for the hire of the vehicle or any other charges paid to the owner or operator of the vehicle.
The GST rate for the road transport of passengers is 5%.
GST on Transportation of Goods
GST is levied on the value of transportation services provided for the transportation of goods. The taxable value of the transport service is determined as the difference between the gross amount charged by the transport operator and any amount paid for the hire of the vehicle or any other charges paid to the owner or operator of the vehicle.
The GST rate for the transportation of goods is 12%.
What is a GTA?
A Goods Transport Agency (GTA) is an individual or a company that arranges or facilitates the transportation of goods by road, rail, air, or ship. GTAs play a crucial role in the supply chain by connecting consignors (senders) with consignees (receivers) of goods. They typically act as intermediaries between the parties involved in the transportation process and handle various aspects of the transportation, including booking cargo space, arranging for vehicles or containers, preparing documentation, and coordinating with carriers.
What Service of Transportation of Goods is Exempt Under Gst?
The following services of transportation of goods are exempt from GST:
- Transportation of goods by a government department or a local authority
- Transportation of goods by a non-profit organization for charitable purposes
- Transportation of goods by a public transport authority
- Transportation of goods by a railway administration
- Transportation of goods by an airline
- Transportation of goods by sea
- Transportation of goods by road where the value of the goods does not exceed Rs. 5,000
Consignment Note and eWay Bill
A consignment note is a document that accompanies the goods being transported and provides details about the sender, receiver, goods being transported, and the transporter. An eWay Bill is an electronic document that is required for the transportation of goods by road with a value of more than Rs. 50,000. The eWay Bill can be generated online and is valid for 24 hours.
What is the Rate of GST on GTA?
The rate of GST on GTA services depends on whether the GTA opts to avail of input tax credit (ITC).
- GTAs opting for ITC: 12% GST
- GTAs not opting for ITC: 5% GST
Under the reverse charge mechanism, the recipient of the GTA’s services is liable to pay GST instead of the GTA if the GTA does not avail of ITC.
Is a GTA liable to register?
Yes, a GTA is liable to register for GST if its turnover exceeds the threshold limit of Rs. 20 lakhs (Rs. 10 lakhs in special category states). However, if a GTA’s turnover is less than the threshold limit, it can voluntarily register for GST.
Who Pays GST While Hiring a Gta?
The liability to pay GST on GTA services depends on whether the GTA opts to avail of input tax credit (ITC).
- If the GTA opts for ITC, The GTA is liable to pay GST at the rate of 12%.
- If the GTA does not opt for ITC, The recipient of the GTA’s services is liable to pay GST at the rate of 5% under the reverse charge mechanism.
Which Businesses Are Liable to Pay GST Under Reverse Charge for a GTA?
Any business that hires a GTA that does not opt for ITC is liable to pay GST on the GTA’s services under the reverse charge mechanism. This includes businesses of all sizes, regardless of their turnover.
Various Scenarios to Determine Who is Liable to Pay GST in Case of a GTA
Here are some of the scenarios to determine who is liable to pay GST in the case of a GTA:
- Scenario 1: A registered GTA opts for ITC and provides transportation services to a registered business. In this case, the GTA is liable to pay GST at the rate of 12%.
- Scenario 2: A registered GTA does not opt for ITC and provides transportation services to a registered business. In this case, the recipient of the GTA’s services is liable to pay GST at the rate of 5% under the reverse charge mechanism.
- Scenario 3: A registered GTA opts for ITC and provides transportation services to an unregistered business. In this case, the GTA is liable to pay GST at the rate of 12%.
- Scenario 4: A registered GTA does not opt for ITC and provides transportation services to an unregistered business. In this case, the GTA is liable to pay GST at the rate of 5%.
Important Points to Know about GST in the Transport Sector
- The GST Council has made it mandatory for all GST-registered GTAs to issue e-way bills for the transportation of goods by road with a value of more than Rs. 50,000.
- GTAs are entitled to claim input tax credit (ITC) on the goods and services used for providing transportation services.
- GTAs are required to file GST returns on a regular basis.
- GTAs are subject to GST audits and penalties for non-compliance.
GST on Transportation FAQs
What is the GST rate on transportation?
The GST rate for transportation services depends on the mode of transport and whether the Goods Transport Agency (GTA) avails of input tax credit (ITC).
Road Transport:
- GTAs opting for ITC: 12% GST
- GTAs are not opting for ITC: 5% GST.
Air Transport:
- Rental services of freight aircraft (with/without operator): 18% GST
Supporting services in transport:
- 9% SGST (cumulative effective rate of 18%)
Who will pay GST on transport charges?
The liability to pay GST on transport charges depends on whether the GTA opts to avail of an input tax credit (ITC).
- If the GTA opts for ITC, The GTA is liable to pay GST at the rate of 12%.
- If the GTA does not opt for ITC, The recipient of the GTA's services is liable to pay GST at the rate of 5% under the reverse charge mechanism.
What are the GST rules for goods transport?
The following are some of the important GST rules for goods transport:
- All GST-registered GTAs are required to issue e-way bills for the transportation of goods by road with a value of more than Rs. 50,000.
- GTAs are entitled to claim input tax credit (ITC) on the goods and services used for providing transportation services.
- GTAs are required to file GST returns on a regular basis.
- GTAs are subject to GST audits and penalties for non-compliance.
Is RCM applicable on freight 1500 or 750?
The reverse charge mechanism (RCM) is applicable on freight charges of Rs. 1500 or more.
What is the RCM limit for 5000?
The RCM limit for goods transport is Rs. 5000. This means that if the value of the goods being transported is less than Rs. 5000, then GST is not applicable.
What is the RCM charge on transport?
The RCM charge on transport is the GST rate that is applicable to the transportation service. For example, if the transportation service is provided by a GTA that does not opt for ITC, then the RCM charge would be 5%.
What is the limit of RCM charges?
The limit of RCM charges is the maximum amount of GST that can be charged under the reverse charge mechanism. For example, if the value of the transportation service is Rs. 10,000, then the maximum RCM charge would be Rs. 500.
Is transportation under RCM?
Yes, transportation is under RCM if the value of the goods being transported is Rs. 1500 or more and the recipient of the transportation service is a registered business.
What is the TDS rate for transport RCM?
The TDS rate for transport RCM is 5%. This means that the recipient of the transportation service is required to deduct 5% of the GST amount and deposit it with the government.
What happens if RCM is not paid?
If RCM is not paid, then the recipient of the transportation service is liable to pay interest and penalties. In addition, the recipient may be subject to prosecution.
