GST on Transport

Updated: 02-04-2024 12:44:24 PM

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GST on transport of goods as well as passengers via road, rail and air feature multiple GST rates ranging from nil to 18%. GST on transportation services for passengers has largely not led to much change in the ticket prices of travelling by rail/road or air. Perhaps even more importantly, input tax credit (ITC) is not always applicable if GST on transport has been charged. In the following sections, we will discuss various aspects of the applicability of GST on transportation of goods or passengers.

GST on Transport of Passengers by Air  

GST on air travel tickets for passengers is applicable as follows*:

• 5% GST on economy class air tickets
• 5% GST on tickets of chartered flights for the purpose of pilgrimage
• 12% GST on business class air tickets
• 18% GST on rental services of aircraft (with or without operator)/chartered flights

*The above list is indicative and subject to periodic change.

If you are travelling for business, you can claim the GST on air tickets as input tax credit (ITC) for your business. Airlines too can claim ITC on input services in case of economy class passengers. In case of business class, airlines ITC can be claimed for food items, spare parts as well as other inputs except fuel.

GST on Transport of Passengers by Rail

GST on rail tickets (passenger transport) is applicable at the following rates*:

• 18% GST on AC and First Class train tickets
• Nil GST on sleeper and general class tickets
• Nil GST on metro tickets/tokens

*The above list is not exhaustive and subject to periodic change.

GST on Road Transport of Passengers

Passenger road transport services feature various GST rates depending upon the mode of transportation chosen. The following are the key GST rates that are applicable to GST on transport of passengers by road*:

• Nil GST on passengers travelling by road on public transport
• Nil GST on transport by road of passengers by metered taxi/auto rickshaw/e-rickshaw
• Nil GST on transport by non-A/C contract carriage/stagecoach
• 5% GST on transport by A/C contract carriage/stagecoach (no Input Tax Credit)
• 5% GST on transport by radio taxi and similar services
• 18% GST on rental services of road vehicles including cars, buses, coaches (with or without operator)    

*The above list is not exhaustive and subject to periodic change.

GST on Transportation of Goods

The transportation of goods carried out by air, rail, road and inland waterways incurs GST on transport at an applicable rate starting from nil GST. The following are some of the key goods that are exempt from GST on transport*:

• Relief materials designated for victims of man-made/natural calamities, mishaps, accidents, etc.
• Pulses, milk, salt, flour, rice and other food grains
• Agricultural produce/products and organic manure
• Military/defense equipment being transported
• Newspapers/magazines registered with Registrar of Newspapers
• If the gross amount charged for goods transport is less than Rs. 1,500

Exemption or Nil GST on transport is also applicable in the following cases:

• Transport of personal use or household goods
• Transport of goods of unregistered persons

Apart from the above cases, GST on transport of goods by a GTA (goods transport agency) features the following taxation rates:

• 5% GST on transport in case ITC (input tax credit) is not availed
• 12% GST is applicable in case ITC is availed

Alternately, the following GST rate may also be applicable:

• 18% GST is applicable to rental services of road vehicles including trucks (with or without operator)
• 18% GST is applicable to rental services of freight aircraft (with/without operator)
• 18% GST applicable on rental services of water vessels including freight vessels (with/without operator)

*The above lists and rates are indicative and subject to periodic change. You can use Paisabazaar’s handy GST Rates HSN tool to get the latest GST on transportation rates.

What is a GTA?

As per the GST Act, a GTA or goods transportation agency refers to any person/entity that issues a “consignment note” or similar document and provides services such as transport of goods by road. As per the definition, a GTA might not always refer to an individual/business that is hiring out vehicles for transportation of goods. Thus it is individuals/businesses that issue a “consignment note” that qualify as GTA. Apart from transportation from consignor to consignee, other key services provided by a GTA include:

• Loading/unloading goods,
• Packing/unpacking goods,
• Trans-shipping i.e. shipping from one intermediary to another instead of end to end transport
• Temporary warehousing

Consignment Note and eWay Bill

Consignment note and eWay bill are two key documents involved in the transportation of goods. The consignment note is a document issued by a GTA (goods transportation agency) in lieu of a receipt of goods for transporting goods by road. Once a consignment note is issued, the lien of goods is transferred to the transporter i.e. the responsibility of goods remains with the transporter till the consignment is delivered to the consignee. No extra charges need to be paid for generating a consignment note which is generated by the transporter. However, the document will contain details of who is paying the GST on transportation and goods included in the consignment.

An eWay Bill is to be generated before goods are transported. This document has to be generated on the official eWay Bill Portal and is a key document for ensuring compliance with GST rules. The e-Way bill is a mandatory requirement for all GST registered individuals and businesses involved in the transport of goods by road from one location to another (whether within transportation occurs within the same state or interstate). Details included in the eway bill include GST paid on goods being transported, name of consignee and consignor as well as details of vehicle being used to transport the goods. Know more about generating and utility of e-Way Bill