RCM Entry 1: Who Actually Pays GST on a GTA Freight Bill

RCM Entry 1 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Most disputes about freight are not about the rate. They are about whether Entry 1 applies at all — and Entry 1 has three separate gates, any one of which can shut the charge off entirely.

Entry 1 of Notification No. 13/2017-CT(Rate) shifts the tax on services by a goods transport agency in respect of transportation of goods by road to the recipient — but only where the recipient is one of seven specified categories, and only where the GTA has not opted for forward charge. A road transporter is a GTA only if it issues a consignment note; the definition in clause (ze) of Notification No. 12/2017-CT(Rate) was substituted by Notification No. 15/2025-CT(Rate) dated 17.09.2025 to exclude an e-commerce operator supplying, or through whom is supplied, local delivery. Supplies to anyone outside the seven categories are separately exempt under entry 21A — so they attract neither charge.

Gate one: is the supplier a GTA?

The definition sits not in the Act but in clause (ze) of Notification No. 12/2017-CT(Rate): a goods transport agency is "any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called."

The consignment note is the whole test. An individual truck or tempo operator who moves goods and issues nothing more than a bill is, on the face of the definition, not a GTA — and transport of goods by road by anyone other than a GTA or a courier agency is exempt under entry 18 of the exemption notification. The commercial gap between the two is enormous, which is why the Handbook devotes so much space to it.

"Consignment note" is itself undefined in GST. The Handbook falls back on the explanation to rule 4B of the erstwhile Service Tax Rules, 1994: a serially numbered document issued against receipt of goods for transport by road in a goods carriage, containing the names of consignor and consignee, the registration number of the goods carriage, details of the goods, place of origin and destination, and the person liable to pay tax — consignor, consignee or the GTA. Any document carrying that information is a consignment note whatever it is called.

Its legal significance is not merely evidentiary. Issuing a consignment note signals that the lien on the goods has passed to the transporter, who becomes responsible for them until safe delivery. It is a document of title, negotiable by endorsement.

And it cannot be dodged by simply not issuing one. Two authorities have said so squarely. In KM Trans Logistics Private Limited the AAAR (Rajasthan) held that issuance or non-issuance of the note does not change the nature of the activity. In Uttarakhand Forest Development Corporation the AAR reasoned that the legislature cannot have intended to leave untaxed those who omit the paperwork, since that would be unjust to those who comply and would invite evasion. Section 8 of the Carriage by Road Act, 2007 independently requires a goods forwarding note to accompany any consignment.

One 2025 carve-out now sits inside the definition. Volume I of the ICAI Background Material records that the GTA definition was substituted through Notification No. 15/2025-CT(Rate) dated 17.09.2025 so that it does not include (i) an electronic commerce operator by whom services of local delivery are provided, or (ii) an electronic commerce operator through whom services of local delivery are provided. That carve-out pairs with the new section 9(5) entry for local delivery inserted by Notification No. 17/2025-CT(Rate) dated 17.09.2025 with effect from 22.09.2025 — local delivery through an ECO is dealt with under section 9(5), not as GTA reverse charge.

Gate two: is the recipient one of the seven?

Entry 1 names them, and the list is exhaustive:

• (a) any factory registered under or governed by the Factories Act, 1948;
• (b) any society registered under the Societies Registration Act, 1860 or any other law in force in any part of India;
• (c) any co-operative society established by or under any law;
• (d) any person registered under the CGST, IGST, SGST or UTGST Act;
• (e) any body corporate established by or under any law;
• (f) any partnership firm, whether registered or not, including an association of persons;
• (g) any casual taxable person;

each located in the taxable territory. The Handbook calls these the specified category recipients.

Note what limb (d) does. Once a person is registered, the other limbs become largely academic — registration alone puts the recipient in the list. The other limbs matter for unregistered factories, societies, co-operative societies, bodies corporate, firms and AOPs, which are caught even though they hold no GSTIN.

And note what falls outside. A supply by a GTA to a person who is none of the seven — an ordinary unregistered individual, for instance — is not merely outside reverse charge. It is exempt under entry 21A of Notification No. 12/2017-CT(Rate), which exempts GTA services to an unregistered person including an unregistered casual taxable person, other than the six categories it then lists. So neither charge applies.

There is a second exclusion written into the entry itself. The first proviso, inserted by Notification No. 29/2018-CT(Rate) with effect from 01.01.2019, disapplies Entry 1 where the recipient is a Department or Establishment of the Central or State Government or a Union territory, a local authority, or a Governmental agency that has taken registration only for the purpose of deducting tax under section 51 and not for making taxable supply. The Handbook adds the point that matters: this service is anyway exempt under entry 21B, so there is no liability at all — not merely a shift back to forward charge.

Gate three: has the GTA opted for forward charge?

The second proviso, inserted by Notification No. 5/2022-CT(Rate) with effect from 18.07.2022, disapplies Entry 1 where the supplier has taken registration, exercised the option to pay under forward charge, and issued a tax invoice with the Annexure III declaration. Both limbs are conjunctive — the option without the declaration on the invoice leaves the entry alive on its terms.

That option, its Annexure V and Annexure VI mechanics, and its deadlines are a subject in themselves. The forward charge option, Annexure V and Annexure VI →

What travels with the freight: the ancillary services point

The GTA definition uses the phrase "in relation to" transport of goods by road, and the CBIC FAQ on Transport and Logistics draws the consequence: loading and unloading, packing and unpacking, transhipment and temporary warehousing provided in the course of road transport are not independent supplies. They are ancillary to the principal supply of transportation, and where the GTA's invoice includes their charges, they form part of the GTA service and are taxed as such.

The converse also holds. If those incidental services are supplied as separate services and charged separately — whether on the same invoice or a different one — they are separate supplies, and Entry 1 does not carry them.

The exemptions that switch off both charges

Entry 21 of Notification No. 12/2017-CT(Rate) exempts GTA transport in a goods carriage of milk, salt and food grain including flour, pulses and rice; organic manure; newspapers or magazines registered with the Registrar of Newspapers; relief materials for victims of natural or man-made disasters, calamities, accidents or mishaps; and defence or military equipment. Where entry 21 applies there is neither forward charge nor reverse charge.

Two limbs of entry 21 are gone. The old value-based reliefs — consideration up to ₹1,500 for a consignment in a single carriage, and up to ₹750 for all goods for a single consignee — were omitted by Notification No. 4/2022-CT(Rate) with effect from 18.07.2022. Any freight policy still applying a ₹750 or ₹1,500 threshold is four years out of date.

"Agricultural produce" also no longer appears in the operative clauses of entry 21 as reproduced in the Handbook, the clause being shown as omitted.

One consequence GTAs themselves overlook

Where the recipient pays under Entry 1, the value is, in the GTA's own hands, treated as an exempt supply for the purpose of common credit reversal. Section 17(3) provides that the value of exempt supply includes supplies on which the recipient is liable to pay tax on reverse charge. A GTA running a mixed book of RCM freight and forward-charge freight is therefore in rule 42/43 territory on its common inputs.

Key takeaways

• Entry 1 applies only if the supplier is a GTA — which means it issues a consignment note, a document with a rule 4B content list and the effect of transferring lien.
• The GTA definition was substituted by Notification No. 15/2025-CT(Rate) dated 17.09.2025 to exclude an ECO supplying or facilitating local delivery, which now sits in section 9(5).
• The recipient must be one of seven specified categories; supply to anyone else is exempt under entry 21A, not merely outside RCM.
• A TDS-only registrant in government is excluded by the first proviso and separately exempt under entry 21B.
• Ancillary services billed within the GTA invoice ride with it; billed separately, they do not.
• The ₹750 / ₹1,500 value exemptions were omitted on 18.07.2022.
• RCM freight counts as exempt supply in the GTA's hands under section 17(3) for credit reversal.

Read next

• The GTA Forward Charge Option: Annexure V and Annexure VI
• ITC on Reverse Charge Tax: Conditions, Timing and the ISD Route
• RCM Entry 14: Security Services and Its Two Exclusions

Disclaimer: Positions stated as on 5 September 2026, based on entry 1 of Notification No. 13/2017-Central Tax (Rate) and entries 18, 21, 21A, 21B and clause (ze) of Notification No. 12/2017-Central Tax (Rate) as reproduced in the ICAI Handbook on Reverse Charge under GST (2nd edition, February 2025, amendments to 1 February 2025), read with the ICAI Background Material on GST, Volume I, for the substitution of the GTA definition by Notification No. 15/2025-Central Tax (Rate) dated 17 September 2025.