Freight refers to bulk transportation of goods via train or truck, aircraft or ship. Since the transport of goods by freight is the commonly used transportation mode for the businesses supplying goods, the introduction of GST on freight charges hasn’t just affected the Indian freight sector but several other sectors as well.
Generally, freight is facilitated either by a GTA (Goods Transport Agency) or common carriers like courier agencies. A GTA is a person providing services with respect to transport of goods via road and issues consignment notes. Hence, any person providing the service in relation to transport of goods by road or related service like packing, unpacking, loading, unloading, etc. could be considered as a GTA (Goods Transport Agency) if such person issues the consignment note. Issuing of the consignment note to the person using the transportation service is the fundamental and integral for the person to be considered as the Goods Transport Agent (GTA). A copy of such consignment note would be sent to consignee which provides consignee the right of receiving goods from the Goods Transport Agent.
The rate of GST on freight charges provided by the GTA is given below:
|Transport Services||GST Rate|
|Transport of agricultural produce||Nil|
|Transport of salt, milk, food grains including flour, rice and pulses||Nil|
|Transport of magazines or newspapers registered with Registrar of Newspapers||Nil|
|Transport of the relief materials for the victims of man-made or natural disasters, accidents, mishaps or calamities||Nil|
|Transport of organic manure||Nil|
|Transport of any goods, where gross amount charged for the purpose of transportation for the consignment transported in the single carriage doesn’t exceeds INR 1,500||Nil|
|Transport of military or defense equipment||Nil|
|For transportation of goods other than the above||5%|
GST on freight charges in the Supply Invoice
GST would be levied the on value of supply as per normal rate which would depend on the goods that are supplied. In case freight charge is added to supply value provided in bill, then the GST would be charged on the freight charges at same rate as the rate of GST on the supplied value.
GST on freight charges for forwarding services
Freight forwarding and logistics services, including movement of the goods by any mode of transport, would be treated as the supply of services. The applicability of GST on freight forwarding or logistics services would depend on whether such transportation is domestic or international.