Since 22 September 2025, a goods transport agency (GTA) can charge GST on road freight at 5% without input tax credit or 18% with full input tax credit. The old 12% option was removed under GST 2.0. When the 5% route applies and you are a registered business or factory, you usually pay the tax yourself under reverse charge and can claim it back as input tax credit.
- The 12% GTA option was merged into 18% (with ITC) from 22 September 2025.
- The 5% option remains, but the transporter cannot claim input tax credit on fuel, repairs or trucks.
- Under reverse charge, the registered business that receives the service pays the 5% GST.
- Transport of some essentials, such as agricultural produce, milk, salt and food grains, stays exempt.
What changed with GST 2.0
At its 56th meeting on 3 September 2025, the GST Council simplified tax rates across the economy. For goods transport by road, the change came into force on 22 September 2025.
Before that date, a goods transport agency could charge 5% (without input tax credit) or 12% (with input tax credit). The 12% slab has now been removed, so the "with credit" option moved up to 18%.
| Option | Before 22 Sep 2025 | From 22 Sep 2025 |
|---|---|---|
| Without input tax credit | 5% | 5% (no change) |
| With full input tax credit | 12% | 18% |
Who counts as a goods transport agency
A goods transport agency, or GTA, is anyone who transports goods by road and issues a consignment note, which in India is usually called the LR or lorry receipt. Most transport companies, including HP Logistics, fall in this category.
If an individual truck owner simply carries goods and does not issue a consignment note, the service is generally not a GTA service, and road transport by such a person is exempt. This is one reason businesses prefer working with a proper transport company: you get a valid LR and clear tax treatment.
5% or 18%: how the two options compare
| 5% option | 18% option | |
|---|---|---|
| Input tax credit for the transporter | Not allowed | Allowed in full |
| Who pays the tax | Often the customer, under reverse charge | The transporter, on its invoice (forward charge) |
| Can the customer claim it back? | Yes, if registered and the freight is for business | Yes, if registered and the freight is for business |
| Usually suits | Customers who want a lower upfront tax amount | Customers who are fully GST-registered and claim credit anyway |
For a GST-registered business that claims input tax credit, the tax on freight is usually not a final cost, because it comes back as credit. The real difference is cash flow and paperwork.
Reverse charge: when you pay the GST
When a GTA works under the 5% route, the law says certain customers pay the tax directly to the government instead of the transporter. This is called reverse charge (RCM). It usually applies when the customer is a factory, a company, a partnership firm, a society or any GST-registered person.
In simple terms:
- The transporter's LR or invoice shows that tax is payable on reverse charge.
- You pay 5% GST on the freight in your own GST return.
- You can claim the same amount back as input tax credit, if the freight is for your business.
Transporters who want to charge GST on their own invoice (forward charge) must declare this choice to the tax department in advance, usually for the whole financial year.
A quick example
Say your freight from Coimbatore to Pune is ₹50,000.
- 5% under reverse charge: the transporter bills ₹50,000. You pay ₹2,500 GST yourself and claim it back as credit.
- 18% forward charge: the transporter bills ₹50,000 + ₹9,000 GST = ₹59,000. You claim ₹9,000 back as credit.
Both routes are legal. What matters is that the LR and invoice clearly state which option applies, so your accounts team can file returns correctly.
What stays exempt
Transport by a GTA of some essential goods remains exempt, including agricultural produce, milk, salt, food grains (including flour, pulses and rice), organic manure, newspapers and relief material. Very small consignments below set freight limits are also exempt. If you move these goods, ask your transporter to mark the exemption on the LR.
This guide is general information to help you understand your freight bill. It is not tax advice. GST rules can change, so please confirm your specific case with your chartered accountant.
How HP Logistics handles GST on freight
Every HP Logistics booking comes with a proper LR and a GST invoice. Before we confirm your load, we tell you which GST option applies to your account, so there are no surprises when your accounts team files returns.
Frequently asked questions
Is the 12% GST option for transport still available?
Can I claim input tax credit on GST paid on freight?
Who pays GST under reverse charge on transport?
Is GST charged if a truck owner does not issue an LR?
