GST on road freight confuses even experienced finance teams. The same truck trip can attract tax at different rates, be taxed under forward charge or reverse charge, or be exempt altogether, depending on who provides it and who receives it. This guide explains the framework in plain language so you can read freight invoices correctly and ask the right questions.
Important: GST rates and conditions for goods transport have been revised several times, including in the 2025 rate rationalisation, and they change by notification. Treat this article as an explanation of how the system works, not as tax advice. Confirm the current rates, exemptions and your own position with your CA or the latest CBIC notifications before you file.
What is a GTA?
Under GST, a Goods Transport Agency (GTA) is a person who provides the service of transporting goods by road and issues a consignment note, often called a lorry receipt or LR. The consignment note is the key: it shows that the transporter has taken responsibility for the goods in transit. Most transport companies and part-load operators that issue an LR are GTAs.
By contrast, a truck owner who simply hires out a vehicle and does not issue a consignment note is generally not treated as a GTA. Transport of goods by road by someone other than a GTA or a courier has generally been exempt. That distinction matters when you hire trucks directly from individual owners.
Forward charge vs reverse charge
Under forward charge, the GTA charges GST on its invoice, collects it from you and pays it to the government, just like most other suppliers.
Under reverse charge (RCM), the GTA does not charge GST on its invoice. Instead, the recipient of the service, which is you, pays the GST directly to the government and can usually claim input tax credit for it. Reverse charge applies when the GTA has not opted for forward charge and the recipient falls into a notified category. These categories have typically included factories, registered businesses, companies, partnership firms, societies and similar bodies, which covers most business shippers.
The rate options
GTAs have broadly been given a choice between two regimes:
- A lower rate without input tax credit for the GTA, which commonly works through reverse charge when the recipient is a business. This has been 5% for many years.
- A higher rate under forward charge, where the GTA charges GST on its invoice and can claim input tax credit on its own costs. This option was 12% before the 2025 rate rationalisation and is understood to have moved to 18% after it; confirm the current rate before you rely on it.
A GTA that wants to use forward charge generally has to declare its choice for the financial year in advance, so the regime should be consistent across its invoices for that year. Ask your transporter which option they have chosen and make sure the invoice matches.
| Situation | Who pays GST | Typical invoice wording |
|---|---|---|
| GTA has opted for forward charge | GTA charges GST on the invoice | GST shown and charged on the invoice |
| GTA has not opted; recipient is a notified business | Recipient pays under RCM | "Tax payable on reverse charge: Yes" |
| Transport by a truck owner who issues no consignment note | Generally exempt | No GST |
| Exempt goods or small consignments (see below) | Generally exempt | No GST |
Common exemptions
Over the years, notifications have exempted the transport of certain goods by a GTA, such as agricultural produce, milk, salt, food grains and some other essentials, and small consignments below specified freight values. Services provided to certain unregistered persons have also had special treatment. These lists are specific and change, so check the current exemption notification for your goods.
Why reverse charge matters to you
If your transporter has not opted for forward charge and you are a notified recipient, you must pay the GST on the freight under reverse charge, report it in your returns and then claim the credit if you are eligible. If you overlook it, you can face interest and penalties even though the transporter's invoice showed no tax. Make sure your accounts team knows which of your transporters bill under RCM.
What a proper GTA invoice shows
- The GTA's name, address and GSTIN
- Your name, address and GSTIN
- Consignment note number and date, origin and destination
- Description of goods, weight and number of packages
- Freight amount and any other charges
- GST rate and amount, or a clear statement that tax is payable under reverse charge
- Place of supply
Input tax credit on freight
When you pay GST under reverse charge, or when a forward-charge GTA charges you GST, you can usually claim it as input tax credit if the freight is used for your business. Under the lower-rate option, the GTA itself generally cannot claim credit on its own inputs, which is why that option carries a lower rate. If you are unsure whether credit is available, ask your CA.
Freight vs warehousing vs packing
GST on warehousing and storage, packing, and the "packers and movers" service for household goods follow different rules and rates from pure GTA freight. If your logistics provider bundles several services on one invoice, ask for each service to be shown separately, so each can be taxed and credited correctly.
How this connects to the e-way bill
GST on the freight and the e-way bill for the goods are two separate obligations. The e-way bill relates to the goods being moved and their value; GTA GST relates to the transport service. Both need to be right. Our e-way bill guide covers the movement paperwork.
Questions to ask your transporter
- Are you registered under GST, and what is your GSTIN?
- Have you opted for forward charge this year, or should we pay under reverse charge?
- Will you issue a consignment note (LR) with every shipment?
- Will warehousing, loading or other services be invoiced separately?
Frequently asked questions
Do I pay GST if I hire a truck directly from its owner? If the owner simply hires out the vehicle and does not issue a consignment note, they are generally not treated as a GTA, and that transport has generally been exempt. Confirm with your CA, because the facts of each arrangement matter.
Can I claim input tax credit on GST paid under reverse charge? Usually yes, if the freight is used for your business and the other conditions for credit are met. You pay the tax under reverse charge and then claim it as credit in your returns.
Does GTA GST apply to part-load bookings? Yes. Part-load operators that issue consignment notes are GTAs, so the same forward-charge or reverse-charge rules apply to their invoices.
The bottom line
For most business shippers, GTA GST comes down to one practical question: is this transporter charging GST on the invoice, or do we owe it under reverse charge? Confirm the answer for each transporter, check every invoice reflects it, and keep your CA in the loop when rates change. Book freight with GST-registered transporters who issue proper invoices and LRs through our B2B freight platform, or explore our cargo and logistics services.