Road freight by a Goods Transport Agency (GTA) is taxed at 5% under Reverse Charge (RCM) by default — the registered recipient pays, with no ITC. A GTA can instead opt for forward charge: 5% without ITC or 18% with full ITC. Under GST 2.0 (effective 22 September 2025) the old 12% forward-charge option was replaced by 18%. Rail and sea freight are 5%; courier and air freight (domestic) are 18%; export freight is zero-rated; farm produce, milk, salt and food grains are exempt.
GST on Freight — All Transport Modes
The GST rate for every common freight and transport scenario in India, with the SAC code, RCM applicability and ITC position under the current schedule.
| Transport / Service | SAC | GST Rate | RCM? | ITC |
|---|---|---|---|---|
| GTA road freight — default (RCM) | 9965 | 5% | Yes | No |
| GTA road freight — 5% forward charge | 9965 | 5% | No | No |
| GTA road freight — 18% forward charge | 9965 | 18% | No | Yes |
| Courier services (Blue Dart, DTDC, Delhivery) | 9968 | 18% | No | Yes |
| Air freight — domestic | 9965 | 18% | No | Yes |
| Air / sea freight — export (outbound) | 9965 | 0% | No | — |
| Sea / inland-waterway freight | 9965 | 5% | No | Yes |
| Rail freight (goods) | 9965 | 5% | No | Yes |
| Farm produce, milk, salt, food grains (road) | 9965 | Exempt | — | — |
| Single consignment < ₹1,500 (road) | 9965 | Exempt | — | — |
| Single carriage on one vehicle < ₹750 (road) | 9965 | Exempt | — | — |
Reflects the GST 2.0 two-slab structure effective 22 September 2025 — the earlier 12% GTA forward-charge option is now 18% with full ITC. Confirm on the official GST portal before invoicing.
GTA: 5% or 18% — Which Should You Choose?
A GTA declares its option at the start of the financial year by filing Annexure V on the GST portal (by 15 March of the preceding year). The default, if nothing is filed, is 5% under RCM where the recipient pays. The trade-off is ITC.
RCM / 5% forward charge — no ITC
- Default is 5% RCM — recipient self-pays
- Or opt 5% forward charge and collect it
- GTA cannot claim ITC on diesel, tyres, repairs
- Recipient paying RCM also cannot claim ITC
- Best for small GTAs & spot-market truckers
18% forward charge — full ITC
- GTA opts in via Annexure V (forward charge)
- GTA claims full ITC on inputs & input services
- Registered recipient claims ITC on the 18% paid
- Replaces the old 12% option under GST 2.0
- Best for large fleet operators with heavy inputs
From 22 September 2025 the GTA forward-charge option of 12% (with ITC) was rationalised to 18% (with full ITC). The 5% RCM default and the 5% forward-charge (no ITC) route are unchanged. If you still see 12% quoted anywhere, it is outdated.
Not sure whether 5% RCM or 18% forward charge is cheaper for you?
Get My GTA Rate →Who Pays GST Under RCM for GTA?
When a GTA has not opted for forward charge, the 5% GST is paid by the recipient under Reverse Charge Mechanism, provided the recipient falls in one of the specified categories. The GTA issues a consignment note without charging GST.
| Recipient Category | RCM Liability |
|---|---|
| Factory registered under the Factories Act | Yes — pays 5% |
| Any GST-registered person | Yes |
| Society / co-operative society | Yes |
| Body corporate (company, LLP) | Yes |
| Partnership firm / AOP / BOI | Yes |
| Casual taxable person | Yes |
| Unregistered individual / HUF | No |
RCM does not apply if the GTA has opted for 5% or 18% forward charge via Annexure V — then the GTA charges and pays the tax.
A GTA must issue a consignment note. Courier companies (Blue Dart, DTDC, Delhivery) are not GTAs — they charge 18% under forward charge, and RCM does not apply. A truck owner who merely hires out a vehicle without a consignment note is also not a GTA.
How GST Adds Up — ₹10,000 Freight Bill
Take a ₹10,000 road-freight bill from a GTA to a registered manufacturer under each option:
5% GTA under RCM
18% GTA forward charge
Under 18% forward charge the tax is higher on the invoice but the registered recipient recovers all of it as ITC, so the net freight cost is lower. Under 5% RCM the ₹500 is a sunk cost because ITC is blocked on GTA services taken under RCM.
Want us to model which GTA option is cheaper across your lanes?
Talk to a GST Expert →Freight That Is Exempt From GST
Transport of goods by road (other than by a GTA or courier) is exempt, and several specific consignments are exempt even when moved by a GTA:
- Agricultural produce — rice, wheat, pulses, fruits, vegetables and similar farm output.
- Milk, salt and food grains including flour, and organic manure.
- Relief material for victims of natural or man-made disasters, and defence equipment.
- A single consignment where the amount charged is ₹1,500 or less.
- Goods carried on a single carriage where the amount charged is ₹750 or less.
GTA & Transporter Compliance
A GTA supplying taxable freight must register once aggregate turnover crosses ₹20 lakh (₹10 lakh in special-category states). Key compliance points:
Choose 18% forward charge if
- You have large ITC on diesel, tyres, repairs & toll
- Most customers are registered and want ITC
- You want simpler billing without RCM tracking
Stay on 5% RCM if
- You are a small GTA with low input costs
- Customers are fine self-paying RCM
- You want no GST outflow / refund cycles
- GST registration (GSTIN) if over threshold
- Annexure V filed if opting forward charge
- Consignment note on every GTA supply
- Correct SAC 9965 / 9968 classification
- E-way bill for consignments over ₹50,000
- RCM self-invoice & payment (recipient side)
- GSTR-1 & GSTR-3B filed on time
- ITC reconciliation (if on 18% FCM)
For a fleet operator with heavy diesel and maintenance input GST, the 18% forward-charge option under GST 2.0 is often cheaper in real terms than 5% RCM — the recipient recovers the 18% as ITC while you unlock full input credit. Model it before you file Annexure V, because the choice is locked for the year.
Frequently Asked Questions
Related TaxClue services
Freight, GTA & RCM — Sorted for Your Business
Whether you run a GTA, hire trucks or receive freight as a registered business, TaxClue's CA-led team handles registration, the 5% vs 18% decision, Annexure V, RCM self-invoicing and return filing — 100% online, across India.