GST on Transport

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As we all know, Transportation plays a vital part in the economy, as any difficulty in transportation disrupts the entire business channel. However, as per the National Highways Authority of India, about 65% of freight and 80% of passenger traffic is transported roads. Transportation of goods by road taken by transporter or courier agency. In this blog, we will discuss GST on Transport services and also the significance of GST Registration.

Before knowing about the GST on transport services, now you need to ensure some facts about the GST (Goods and Services tax)

What is GST?

GST is a comprehensive Indirect Tax that is to levy on sale, manufacture, and consumption of goods and services over the nation. It is a separate tax applicable to the supply of goods from the manufacturer to the consumer. GST is relevant only on value addition at each stage. Although, GST registration is compulsory for registering business on Transportation.

Now, we discuss the procedure of GST on Transportation.

GST on transportation varies from nil to 18% based on transportation medium such as air, road, rail. In the following sections, we will understand GST on each transport service category.

GST on Transport by Air 

If transportation is conducted via air such as airline service then, GST on air travel tickets is notified as follows:

  • 5% GST on economy class air tickets
  • 5% GST on chartered flights
  • 12% GST on business class 
  • 18% GST on rental services of aircraft

GST on Transport by Rail

GST on rail tickets notified at the following rates

  • 18% GST on First Class AC train tickets
  • Nil GST on sleeper as well as general class tickets
  • Nil GST on metro tickets

GST on Road Transport 

Passenger road transport services feature different GST rates depending upon the mode of transportation chosen. The following are the critical GST rates on road transport service are follow- 

  • Nil GST on passengers travelling by public transport
  • Nil GST on transport by road of passengers by taxi/auto-rickshaw/e-rickshaw
  • Nil GST on non-A/C contract carriage and stagecoach
  • 5% GST on  A/C contract carriage and stagecoach. However, no Input Tax Credit can b availed.
  • 5% GST on transport by radio taxi services
  • 18% GST on rental services of road vehicles.

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

In certain cases, the service of transportation has exempted by roads under the GST regime. GST is not required to be paid by GTA [Goods Transportation Agency] in certain cases. Let’s understand

Basic about Goods Transport Agency [GTA]

As per the GST Act, a GTA or goods transportation agency are the transportation service providers who provide goods transportation services such as Agarwal movers and packers.  

GTA is also required to obtain GST registration and requires to pay GST on its services however If a GTA renders the services to the businesses, the recipient of services (buyer) is required to pay GST under reverse charge mechanism.

Get ready to pay for Ready-to-eat Popcorn 18% GST!

In case, if you need any further guidance as regards the GST registration, please feel free to contact our business advisors at 8881-069-069.

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