GST on goods transport

Is your transporter a GTA?

A goods transport agency (GTA) is a person who provides road transport of goods and issues a consignment note (bilty / LR), by whatever name. The consignment note is the test. It shows the transporter takes responsibility for the goods until delivery.

Reverse charge vs forward charge for GTA

By default, when a GTA carries goods for specified recipients (a factory, a registered person, a company, a partnership firm and certain others), the recipient pays GST under reverse charge. The person who pays freight, or who is liable to pay it, is the recipient.

A GTA can instead opt to pay tax itself under forward charge, by filing a declaration with the department for the financial year. It then charges GST on its invoice and the recipient claims ITC normally. The rate under RCM and the forward-charge options are fixed by notification; confirm the current rates on cbic-gst.gov.in before you set up your ledgers.

If the GTA's bill shows no GST and says 'tax payable by recipient', you must pay it under RCM. See reverse charge mechanism.

Worked example: freight under reverse charge

A hardware distributor in Indore receives a consignment from Ahmedabad. The GTA's bill shows freight of ₹12,000, no GST, with a reverse charge note. Assume the RCM rate is 5% (check the current rate).

• Inter-state movement, so IGST: ₹12,000 × 5% = ₹600.
• Issue a self-invoice and record the RCM liability.
• Pay ₹600 in cash in GSTR-3B (RCM tax cannot be paid using ITC).
• Claim ₹600 back as ITC in the same return, if the freight is for business and ITC is otherwise allowed.

The net cost is nil, but skipping the payment and taking no credit is still an error: the cash payment and the credit are both required.

'Freight paid' or 'to pay': who is the recipient?

The person liable to pay freight is the recipient of the GTA service, and so the one who pays RCM.

• Freight paid (the consignor pays the GTA): the supplier sending the goods pays RCM, and usually recovers the cost through the price or the invoice.
• To pay (the consignee pays on delivery): the buyer receiving the goods is the recipient and pays RCM.
• If the person liable is an unregistered individual, the service to them is generally exempt.

Agree in writing who pays freight. If both sides assume the other is paying RCM, it goes unpaid; if both pay, one side has paid tax it did not owe.

Freight you charge your buyer

When you deliver in your own vehicle or arrange transport and bill the buyer for it on your sales invoice, the freight is part of your supply of goods. It is taxed at the rate of the goods, not as a separate transport service. The detail, with a calculation, is in freight and delivery charges in GST invoices.

Documents to keep

• The GTA's consignment note and freight bill, with GSTIN where registered.
• The GTA's forward-charge declaration copy, if it charges GST.
• Your self-invoice and payment voucher for RCM.
• E-way bills linked to each movement; see e-way bill basics.
• For exempt truck hire, a simple bill or receipt showing no consignment note was issued.

Common mistakes

• Treating every truck payment as exempt even when an LR was issued.
• Paying RCM but forgetting the ITC claim, or claiming ITC without paying.
• Both the GTA and the recipient paying tax on the same freight.
• Booking freight in a single expense ledger with no GST classification, so RCM never shows in the return.

This is general information, not tax advice.

Checking freight with Tally and Cashflow OS

Create separate freight ledgers in TallyPrime for GTA under RCM, GTA with GST charged and exempt hire, so each lands in the right GSTR-3B row. Cashflow OS syncs those ledgers; the owner can open the freight ledger on the phone and see the month's spend, and the GSTR-3B view prepared from your Tally data shows whether RCM liability and the matching credit both appear.