How GST on freight works after GST 2.0
GST on freight depends on who moves the goods. A Goods Transport Agency (GTA) is a transporter that issues a consignment note (bilty / LR). Most road freight paid by businesses is GTA freight, and the GTA has three ways to be taxed from 22 September 2025:
| GTA option | Rate | Who pays GST to the government | ITC for the GTA |
|---|---|---|---|
| Reverse charge (default) | 5% | The recipient, under RCM | Not relevant (GTA charges no GST) |
| Forward charge, no ITC | 5% | The GTA, on its invoice | No |
| Forward charge with ITC | 18% | The GTA, on its invoice | Yes (replaced the old 12% option) |
A GTA that wants either forward-charge option files a declaration in Annexure V before the financial year starts. If it has not, its freight to a specified recipient is taxed under reverse charge.
Worked example: ₹20,000 freight bill
- RCM at 5%: you pay the GTA ₹20,000 and deposit ₹1,000 GST yourself in GSTR-3B (cash only). You can then claim the ₹1,000 as ITC.
- Forward charge at 5%: the GTA bills ₹21,000 (₹1,000 GST). You claim ₹1,000 ITC; the GTA gets no ITC on its fuel or trucks.
- Forward charge at 18%: the GTA bills ₹23,600 (₹3,600 GST). You claim ₹3,600 ITC; the GTA claims ITC on its own costs.
For a registered business that can take full ITC, the three options cost the same in the end; only the cash flow and who files the tax differ. For a buyer who cannot claim ITC, such as a business making only exempt supplies, the 18% option costs more than the 5% options.
When reverse charge applies
RCM on GTA freight applies only when the person paying the freight is a specified recipient: a registered person, a factory, a society or co-operative society, a body corporate, a partnership firm, or a casual taxable person. The person who pays the freight (consignor or consignee) pays the GST.
When there is no GST on freight
- A truck owner or operator who does not issue a consignment note is not a GTA, and road transport by them is exempt.
- GTA services to an unregistered person (other than a specified recipient) are exempt.
- GTA transport of specified goods such as agricultural produce, milk, salt, food grains, organic manure, relief material and defence equipment is exempt.
Courier and freight on your own invoice
Courier services are taxed at 18% under forward charge, with no RCM. If you are a seller and charge delivery to your customer on the same invoice as the goods, that freight is part of the value of the goods and takes the goods' GST rate, not a separate freight rate.
Legal sources
- Notification 11/2017-Central Tax (Rate), entry 9 (GTA rates), as amended by Notification 15/2025-Central Tax (Rate) from 22 September 2025.
- Notification 13/2017-Central Tax (Rate), entry 2 (reverse charge on GTA services to specified recipients).
- Notification 12/2017-Central Tax (Rate), entries 18, 21 and 21A (exempt road transport and GTA services).
Check the current text on cbic-gst.gov.in before you file.