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GST on Transport

GST on the transport of goods as well as passengers through roads, rail, and air attract multiple transport GST rates ranging from nil to 18%. Transportation is an important part of the economy as any impediment in transportation disrupts the entire business channel. This is why, whenever there is a petrol/diesel price change, it has a far-reaching effect on the disruption of business. 

GST on transportation services for passengers has a little bit impact on the ticket prices of travelling by rail/road or air.

Transportation simply means to carry people and goods from one place to another. This has become vital in each stage of human civilization. Transportation has contributed the most to the economic, social, cultural, and political development and uplifting the nation. Speedy industrialisation is nearly impossible without a robust transportation system.

What are the Significant Modes of Transport?

In India, there are four major modes of goods transportation from one place to another, viz. rail, air, sea, and road: 

  • Rail is a comparatively faster mode of transportation and hence, is ideal for perishable goods. Rail haulage would be needed that can be purchased through a freight company, a third-party logistics or a terminal operator.
  • If you want your goods to travel long distances quickly, then the airway is the fastest mode available. There are some additional costs one needs to consider, such as security fees, handling charges, duty cost, and taxes which makes it a bit expensive mode of transport.
  • If you want an economical way to transport large-volume goods, then the waterway is a great method. However, this transportation method is relatively slow and may not be as flexible as other modes of transportation listed above.
  • Last is Road transportation, which is the most common method of transporting goods across states. It is generally used for goods that need to be carried for short or long distances and on an urgent basis. Moreover, what makes road transportation frequently used is the reason it is used before and after any of the above methods to ship the goods to final destinations.

GST on Transport of Goods Through Different Modes

GST on Transport Charges by Air

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

  • Economy class air tickets: 5% GST
  • chartered flights tickets for the purpose of pilgrimage: 5% GST
  • Business-class air tickets: 12% GST
  • Rental services of aircraft (with or without operator)/chartered flights: 12% GST

*The above list is subject to periodic change.

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

GST on Transport Charges by Rail

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

  • AC and First Class train tickets: 5% GST
  • Sleeper and general class tickets: 5% GST
  • metro tickets/tokens: 12% GST

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

GST Rate on transport by Road

Unlike other modes of transport, passenger road transport services attract various transportation GST rates depending upon the mode of transportation chosen. The following are the primary transportation charges GST rate that is applicable to GST on transport charges by road*:

  • Passengers travelling through road by public transport: Nil GST
  • Transport by road in a metered taxi/auto-rickshaw/e-rickshaw: Nil GST
  • Transport by non-A/C contract carriage/stagecoach: Nil GST
  • Transport by A/C contract carriage/stagecoach (no Input Tax Credit): 5% GST
  • Transport by radio taxi and other similar services: 5% GST
  • Rental services of road vehicles which include cars, buses, coaches (with or without operator): 18% GST

 *The above list is subject to periodic change.

GST on Transportation Charges of Goods

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

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

Exemption of GST on transport charges is also applicable in the following cases:

  • Transport of household goods
  • Transport of goods of unregistered persons

Other Transportation Modes and GST charges applicable

Transportation of goods by road can be done either by a transporter or by a courier agency. Now, a transporter can be of two types:

  • A Goods Transport Agency (GTA)
  • Transport owners (vehicle owners)

The primary difference between a GTA and transport owners is that a GTA is a service provider that provides service of transportation of goods through vehicles provided by others. On the other hand, transport owners are the ones who are themselves the owners of the fleet of vehicles.

GST on the transport of goods by a GTA (goods transport agency) attracts the following taxation rates:

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

Alternately, the below-given GST rates may also be applicable:

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

*The above lists and rates are indicative and subject to periodic change.

GTA

A GTA, or goods transportation agency, is defined under the GST Act as any person or organisation that issues a “consignment note” or comparable instrument and offers services such as road transport of goods. 

According to the definition, a GTA does not usually refer to an actual individual or corporation that rents out cars for the movement of products. Individuals/companies that issue a “consignment notice” so qualify as GTA.

What are Consignment Note and eWay Bill?

Consignment notes and eWay bills are two primary 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 the transportation of goods by road.

An eWay Bill is to be generated before goods are transported. It 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 mandatory for all GST registered individuals and businesses involved in the goods transport by road from one location to another.

GST on Transport - FAQs

Q1. Can we claim GST on transportation expenses?

Yes, whether the transporter charges 5% or 12%, itc will be available to you. The transporter cannot claim itc if the other transporter charges 5% GST on its invoice, but it is available if the GST is 12%.

Q2. How can I register as a transporter under GST?

You can simply to the Eway bill portal and apply online.

Q3. Is GST required for transporters?

A transporter is required by GTA to obtain a GST registration if their aggregate turnover exceeds INR 20 lakhs or INR 10 lakhs for a single category in a fiscal year.

Q4. Is transporter ID required in the e-way bill?

Transporter ID is now required in order to generate a Part-A Slip. Where transport details are not available, the taxpayer must enter the transporter’s ID to generate the Part A slip, which will be corrected by the transporter in Part B of the e-way bill.

Q5. What is a non-taxable supply?

Non-taxable supply is the supply of goods and services that are not liable to tax under the CGST Act or the Act.

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