Taxation of GTA Services under GST and Application of RCM
Definition of a GTA
A Goods Transport Agency is defined as a person providing road transport services for goods and issuing a consignment note.
If a transporter does not issue a consignment note, they are not considered a GTA, and their services are not liable to GST.
Thus, independent truck or tempo owners who do not provide consignment notes are typically not classified as GTA.
GST Taxability Framework for GTA Services (Revised up to 22.09.2025)
Tax Structure
| Category | GST Rate | ITC Availability | Person Liable to Pay Tax |
|---|---|---|---|
| RCM (Reverse Charge Mechanism) | 5% | ITC available to the recipient | Recipient of service |
| FCM (Forward Charge Mechanism) | 18%* | Full ITC allowed | GTA |
| FCM – Optional Concessional Rate | 5% | No ITC for the GTA | GTA |
*Prior to 22.09.2025, the applicable rate was 12% with ITC.
Key Points
A GTA must choose the Forward Charge option (18%) every year by submitting Annexure V on the GST portal.
If the GTA wishes to discontinue the option, Annexure VI must be filed; otherwise, the GTA will continue under the default RCM structure (5%).
Once selected, the option remains valid for the entire financial year.
GTA must also include a declaration on invoices when opting for Forward Charge.
Mandatory Invoice Declaration (for Forward Charge)
When a GTA chooses to pay GST under Forward Charge, they must include the declaration as specified in Annexure III of Notification 13/2017, inserted through Notification 5/2022–Central Tax (Rate) dated 13-07-2022 (effective from 18-07-2022).
Declaration:
“I/We have obtained registration under the CGST Act, 2017 and have opted to pay GST on GTA services for transportation of goods under Forward Charge from the Financial Year ______. We have not switched back to the Reverse Charge Mechanism.”
Liability to Pay GST under RCM
GST under the Reverse Charge Mechanism (RCM) becomes payable when the freight charges are borne by any of the following types of recipients:
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A factory
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A society
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A cooperative society
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A body corporate
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A GST-registered person
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A partnership firm or an Association of Persons (AOP)
-
A casual taxable person
If the freight is paid by an unregistered customer, the GTA will need to charge 18% GST under Forward Charge (only if the GTA has opted for FCM).
If the GTA has not opted for Forward Charge, the service continues to be exempt for unregistered recipients as per GTA provisions.
Situations Where RCM Does Not Apply
The Reverse Charge Mechanism (RCM) is not applicable to GTA services when goods are transported by road in a goods carriage to the following entities:
(a) Any department or establishment of the Central Government, State Government, or Union Territory;
(b) Any local authority;
(c) Any governmental agency,
provided that such entities are registered under the CGST Act solely for the purpose of TDS compliance under Section 51, and not for carrying out taxable supplies of goods or services.
Important Note
These services are exempt from GST under Entry 21B of Notification 12/2017, meaning no GST liability arises in such cases.
GTA Service Exemptions
The following categories of transportation services provided by a Goods Transport Agency remain exempt from GST:
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Transport of agricultural produce
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Milk, food grains, and salt
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Organic manure
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Newspapers
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Relief or disaster-related materials
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Defence-related goods transported for the Government
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GTA services provided to an unregistered individual, including an unregistered casual taxable person
Place of Supply Rules for GTA Services
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If the recipient is registered: The place of supply is the location of the recipient.
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If the recipient is unregistered: The place of supply is the location where the goods are handed over to the GTA for transportation.