Here’s All You Need To Know About Transport GST

The GST on transport was first introduced by the Indian government in 2017 under the regime of GST(Goods and Service Tax). The main motive was to follow the single tax system for the transportation system despite paying multiple taxes such as VAT, service tax, excise duty, sales tax, purchase tax, etc. 

In this comprehensive guide, we will try to simplify the complex terms in simple language while explaining the various terms regarding the transport GST.

A] What Is GST And Is It Applicable On Transport?

The Goods and Services Tax is an indirect tax that is used in the supply of various goods and services in India. Under GST, a company has to pay a certain amount of tax if they wish to do business. It is a comprehensive tax because it subsumed various indirect taxes, except a few state taxes, into one. 

To answer the second question above, yes GST is charged on transportation. There are separate norms that impact both transport and logistics services under GST.

And while it applies to most transport facilities, there are exemptions for certain services or service providers. All road transportation services are exempt from GST, but if you are a GTA (Goods Transport Agency) or a courier service then you will be taxed even if you use roadways.

B] What Is A GTA?

According to Notification No. 11/2017-Central Tax (Rate) dated 28th June 2017, “goods transport agency” or GTA means any person who provides service to transport of goods by road and issues consignment notes, by whatever name called. This means that anyone can hire a transport service but the only ones holding a consignment note are considered as GTA.

C] What Goods Are Exempt/Charged NIL From GST?

All modes of transport such as rail, airways, roads, and waterways incur GST. Here are some of the services that are exempt under Goods and Service Tax.

• Relief materials for natural calamities, mishaps, accidents, etc
• Food grains like pulses, rice, salt, flour, milk, and more
• All kinds of agricultural products and organic manure
• Military defense equipment
• Newspapers and Magazines registered under the Registrar of Newspapers
• If the gross amount charged for goods transport is under Rs.1500
• Transport of personal or household goods exempted home shifting services
• Transport of goods of unregistered person

D] What Goods/Services Are Charged Under GST for Transport Service?

• 5% GST levied if ITC is not availed
• 12% GST if ITC is availed
• 18% GST is applicable on rental services including trucks (with or without an operator)
• 18% GST is applicable on rental services of freight aircraft (with or without operator)
• 18% GST is applicable on rental services of water vessels including freight vessels (with or without operator)

These rates are prone/bound to change as per the movement of the economy. Hence, it’s always a good idea to monitor any updates to maintain the supply chain trends.

E] GST Rate On Transportation Services

Here is a brief overview of the GST rate on transportation services:

1. GST on Air Transport

• 5% GST on Economy Class Tickets
• 5% GST on tickets of chartered flights for pilgrimage
• 12% GST on business class air tickets
• 12% GST on rental services of aircraft(with or without operator)/chartered flights

2. GST on Transportation By Road

• NIL GST on transport for public passengers
• NIL GST on transport through metered auto rickshaw or taxi
• NIL GST on transport through non-AC contract carriage or stagecoach, excluding storage services.
• 5% GST on transport through AC contract carriage or stagecoach(without input tax credit)
• 5% GST on transport through radio taxi and similar other services
• 18% GST charge on transportation through rental services for cars, buses, coaches

3. GST on Rail Transport

• 5% GST on transport charges for AC and first-class train tickets 
• 5% GST on Sleeper and general class tickets
• 12% GST on metro tickets or tokens

*GST on transport charges is subject to change, keep yourself updated regarding the latest GST rates.

4. GST on Packers and Movers

• 18 % GST on Packers and movers

* GST charges of packers and movers can vary depending on changes in government regulations.

F] Important Points to Know about Transport GST

Here are some of the key points to keep in mind while dealing with transportation services:

• Taxation on Services: GST applies to all modes of transport including road, rail, air, and maritime transport.
• GST Rates: Different modes of transport have their different GST rates.
• Input Tax Credit(ITC): Transport services can claim their input tax services on paid GST for inputs including fuel, vehicle maintenance, etc.
• GST Registration: Transport service providers including fine art moving services must register for GST if their annual turnover exceeds the threshold.
• Exemptions and thresholds: Some of the transportation services excluding office shifting services(applies GST of 18%), may be exempted or have a turnover threshold limit.
• Impact on Pricing: Variation in GST rate will lead to fluctuations in the pricing of the overall services, better to plan accordingly.

Conclusion

By applying GST on various transportation services, the government aims to collect revenue, so businesses involved in transportation should navigate the structure of GST to ensure the smooth operations of their services. Such businesses or services can seek guidance from GST professionals to have a clear and thorough idea about their taxation regulations and charges as per rules decided by the government itself.

We, Mega Pack and Carry Pvt. Ltd offers flexible and convenient packing and moving services charges in the fastest way while covering the risk of your precious goods with 24*7 customer support.

If you are planning to move your logistics at ease, choose us as the best packers and movers in India.