Transport GST Rate - All Transport Modes Rate

To classify the services, the GST Council linked all the GST rates to the Service Accounting Code (SAC Code). The Service Tax Department shall use the SAC Codes to levy the tax for the categories of services used. The GST Council introduced the Transport GST rate linking to the SAC Codes under 5%, 12%, and 18% GST rates. This freight charges GST differs based on the nature of transport, and the nature of goods and passengers. In this article, we'll look at GST on transport services, such as air, water, and land transportation.

Key Points on Freight Charges GST

GST on Road Transport: Generally, GST on transport services for road are subject to a 5% GST rate. However, if an unregistered goods transport agency (GTA) provides the service, it may be exempt or fall under the reverse charge mechanism.
GST on Rail Transport: Freight GST rate for rail also carry a 5% GST rate, making rail an economical choice for goods transportation.
GST on Air Freight: Air freight charges GST attract an 18% rate, reflecting the higher costs and premium nature of air cargo services.
GST on Sea Freight: Similar to air freight, transport GST charges for sea freight services are taxed at an 18% GST rate.
Reverse Charge Mechanism (RCM): For certain road transportation services, the recipient is responsible for paying based on the freight GST rate under the RCM, where the liability to pay tax shifts from the provider to the recipient.
Exemptions: Specific goods, such as agricultural produce, are exempt from GST on transport GST charges, supporting the agricultural sector and keeping costs lower for essential goods.
Composite Supply: If freight services are part of a composite supply (e.g., delivery included in the sale of goods), the freight GST rate for the principal supply applies to the freight as well.
Documentation Requirements: To claim input tax credits on freight charges, businesses must ensure they have the appropriate GST-compliant invoices and other required documentation.

GST Registration for Transporters

GST registration has been made mandatory in India for all taxable persons involved in the business of good transport irrespective of the annual sales turnover. Further, persons or businesses involved in providing goods transport services must be familiar with Transport GST rate and GST E-Way Bill rules and regulations. Know more about GST registration requirement for Transporters, Warehouses and Godowns.

What is the Transport GST rate?

The Goods and Services Tax (GST) rate for transportation services in India varies based on the type of transport and the nature of goods or passengers. Generally, the transportation of goods by road is exempt from GST if it is provided by unregistered goods transport agencies (GTAs). However, registered GTAs charge 5% GST under the reverse charge mechanism (RCM), where the service recipient pays the tax. For air and rail freight, Transport GST rate is set at 5% for domestic goods transport, while passenger transport services are taxed at rates ranging from 5% to 12%, depending on the class and type of travel (economy or business class, for example).

Land Transport Services of Goods

In the SAC code, under the group goods transport services, there is a separate heading for land transport services of goods. The following GST on transport services are classified under this group with the respective SAC codes. SAC Code 996511 - Road transport services of Goods, including letters, parcels, live animals, household and office furniture, containers and others by refrigerator vehicles, trucks, trailers, man or animal-drawn vehicles or any other vehicles. SAC Code 996512 - Railway transport services of Goods, including letters, parcels, live animals, household & office furniture, intermodal containers, bulk cargo, etc. SAC Code 996513 - Transport services of petroleum & natural gas, water, sewerage and other goods via pipeline. SAC Code 996519 - Other land transport services for goods.

Water Transport Services of Goods

In the SAC code, under the group goods transport services, there is a separate heading for water transport services of goods. The following services are classified under this group with the respective SAC codes. SAC Code 996521 - Coastal and transoceanic (overseas) water transport services of goods by refrigerator vessels, tankers, bulk cargo vessels, container ships, etc. SAC Code 996522 - Inland water transport services of goods by refrigerator vessels, tankers and other vessels.

Air Transport Services of Goods

In SAC code, under the group goods transport services, there is a separate heading for air transport services of goods. The following services are classified under this group with the respective SAC codes. SAC Code 996531 - Air transport services of letters & parcels and other goods. SAC Code 996532 - Space transport services of freight.

GST Rate for Goods Transport Services

Transport GST rate for rail attracts 5% GST with input tax credit allowed on input services. Services of a goods transport agency (GTA) related to transporting goods and shipping used household goods for personal use attract 5% GST with no input tax credit allowed. Transport of goods in a vessel, including services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India is taxable at 5% GST with input tax credit of input services. This Transport GST rate would be applicable for services relating to the import of goods into India. Transport GST charges for transporting goods in containers by rail by any person other than Indian Railways attract a 12% GST rate with a full input tax credit. In case the Transport GST rate for the services has not been specifically mentioned above, then an 18% GST rate would be applicable with a full input tax credit.

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