There is no single GST rate for all freight. First identify the supplier, transport mode, whether a GTA issued a consignment note, who is liable under forward or reverse charge, whether an exemption applies, and whether freight is a separate service or part of a composite supply.
Start with classification
Freight may be road transport by a Goods Transport Agency, transport by a person who is not a GTA, courier service, rail, air, vessel or multimodal transport. The contractual description is not decisive. For GTA analysis, the consignment note and responsibility assumed for transportation are central.
Road transport and GTA
Road transportation of goods by a person other than a GTA or courier is generally dealt with differently from GTA service and may be exempt under the services exemption notification. A GTA's tax option, recipient category and place of supply determine forward or reverse charge and the rate/ITC conditions. Never apply "5% RCM" to every road freight invoice.
Forward charge and reverse charge
Under notified conditions, specified recipients of GTA services may pay tax under reverse charge unless the GTA has validly opted for the applicable forward-charge treatment. The supplier's invoice, declaration, registration and tax option must be checked for the financial year. RCM tax is paid in cash, but the recipient may generally claim ITC if normal section 16 conditions are met—contrary to the supplied blanket denial.
Mode-wise caution
| Mode/service | Key question |
|---|---|
| GTA road freight | Consignment note, option, recipient and exemption |
| Non-GTA road transport | Whether exemption applies |
| Courier / express cargo | Usually not treated as ordinary GTA; classify the service |
| Rail | Operator, goods and current rate/exemption entry |
| Air | Domestic/international route and notified treatment |
| Vessel / ocean | Contract, place of supply, import/export and current court/notification position |
| Multimodal transport | Statutory definition and single-contract facts |
Composite supply and delivered goods
If the seller contracts to deliver goods and freight is ancillary to that supply, the entire composite supply generally follows the principal supply's tax treatment. Separately contracted freight may be an independent transportation service. Incoterms, title, risk, invoice presentation and contractual responsibility matter.
Imports and exports
Do not publish the old blanket statement that import ocean freight is always subject to 5% IGST under RCM. The Supreme Court's Mohit Minerals decision and subsequent notification changes materially affect analysis. Export freight is not automatically exempt merely because a foreign recipient is billed; place-of-supply, supplier/recipient location and export-of-service conditions must all be checked.
ITC conditions
A registered business using transportation for taxable business supplies may claim eligible ITC when tax is lawfully paid and section 16 conditions are met, subject to blocked credits and documentation. GTA rate options can restrict the GTA's own input credits; that is different from saying the recipient can never claim RCM credit.
Exemptions
Current notifications contain exemptions for specified goods, consideration thresholds and transport situations. Agricultural produce and named essentials require exact entry-by-entry verification; descriptions such as processed foods may not qualify merely because their origin is agricultural.
Invoicing and return workflow
- Verify contract, consignment note and supplier status.
- Determine classification, place of supply, exemption and tax liability.
- Issue or validate the tax invoice/self-invoice/payment voucher as applicable.
- Pay forward-charge or RCM tax in the correct period.
- Reconcile GSTR-1, GSTR-3B and GSTR-2B records.
- Claim ITC only when statutory conditions are met and retain evidence.
Common errors
- Using one rate for all modes.
- Calling every transporter a GTA.
- Failing to check the GTA's annual option.
- Denying all recipient ITC under RCM.
- Applying freight's separate rate to a composite supply.
- Using obsolete ocean-freight rules.
- Claiming exemption without matching notification language.
Frequently asked questions
Is all freight taxed at 5%?
No. Classification, mode, exemption, charge mechanism and supplier option determine treatment.
Can the recipient claim ITC on GTA RCM tax?
Potentially yes if the tax is lawfully paid and normal ITC conditions are satisfied; the GTA's own credit restriction is a different issue.
Is courier service GTA service?
Not automatically. Courier and express-cargo services require their own classification analysis.
Does freight always follow the goods rate?
Only where it forms part of a composite supply whose principal supply is the goods.
Official starting points
Editorial review record
| Review level | Reviewed by | Status | Date |
|---|---|---|---|
| 1 | TargoLegal Research and Editorial Desk | Completed | 22 July 2026 |
| 2 | Independent professional reviewer | Pending | — |
