Logistics GST Rate: What You Need to Know for Freight and Transport

In India, logistics plays a vital role for almost all businesses. It is also the driving factor for a smooth and seamless supply chain. Logistics services, an important part of the supply chain, are subject to the Goods and Services Tax (GST). Logistics is about the movement of goods from one point to another. After the concept of GST was introduced, there has been a significant change in the logistics sector. Therefore, it is essential for businesses, transporters, and any other entities in logistics to know and understand the GST rates applicable for better optimisation and compliance with GST regulations. The article further explores how GST works and the logistics GST rate in the sector. 

What is GST?

GST is an indirect tax, more elaborately known as the Goods and Services Tax. It was passed in March 2017 and successfully implemented in July 2017. GST has replaced indirect taxes such as service tax, excise duty, and VAT. 

It is a comprehensive tax levied on the supply of goods and services. Since GST is a multi-stage tax, it is levied on every stage of a supply chain, from purchasing raw materials to selling goods to the end customer. 

GST On Logistics Services

The Goods and Services Tax applies to every logistics service apart from the mainstream transport of goods and services from one point to another. Logistics services for which GST is applicable include warehousing, packing/unpacking services, and even GST on courier services prevails. 

GST for Freight Charges (Road)

Transportation of goods is done via various means, such as air, rail, waterways, and roads, where 65% of the freight is transported via roads in India. The applicable GST depends on the mode of transport. Below is a table that explains the applicable GST percentage for freight transport via roads:

Different Types of Transportation via Road	GST Rate
Rental car or bus service	18%
Radio Taxi and other services	5%
AC Carriage (without Input Tax Credit)	5%
Non-AC Carriage	0%
Taxi, Autorickshaw	0%
Public Transport	0%

GST on Transportation for GTA

GTA stands for Goods Transport Agency, which is an entity that offers transportation services for goods and issues a consignment note. When it comes to GTAs, the logistics GST rate applicable is as follows:

• If an Input Tax Credit (ITC) is availed, the GST applicable is 12%.
• If ITC is not available, then the applicable GST is 5%.

GST Applicable On Other Transportation Modes

Apart from the mainstream roadways, freight is moved via other modes of transportation such as air, rail and waterways. Depending upon the different modes of transportation, the GST on freight charges is also different. 

• GST on transportation charges by rail is 5%.
• The logistics GST rate applicable to the transportation of goods via air is 18%.
• The transport GST rate for goods through water routes is 18%.

GST Exemptions for Freight Charges

Not all logistics services are subject to GST charges. The GST is exempted for some sectors and types of goods to promote fair trade. Below are some of the exemptions from GST on logistics services:

• When newspapers or magazines are transported.
• When goods are transported under government contracts, either for relief operations or defence services.
• When goods like milk, agricultural products or essential food items are transported.
• Transportation by service providers who are not registered under GST.
• Transportation of household goods.
• Transportation of goods by a non-GTA service provider.
• Transportation of military equipment.

The government offers these exemptions on the GST rate on transportation charges so that all essential goods are easily accessible to people from diverse backgrounds.

Also check – How to calculated freight charges?

HSN Code for Logistics Services 

The Harmonised System of Nomenclature, or HSN, is a code that classifies goods for trade and taxation purposes. Below is the list of HSN codes for logistics services:

Service	HSN Code
Gods Transport Services	9965
Transportation of goods such as live animals, furniture, and letters/parcels via road	996511
Transportation of goods such as live animals, furniture, and letters/parcels via rail	996512
Transport via pipeline of natural gas, petrol or sewage	996513
Other Types of Land Transport	996519
Transport via Waterways (Overseas)	996521
Inland Water Transport	996522
Transport via Air	996531
Space Transport	996532

How Does GST Impact The Logistics Services?

The introduction of the logistics GST rate has significantly changed how the logistics sector operates. Here’s how GST impacts the logistics services:

Lower Logistics Cost

Prior to GST, several state taxes considerably increased the overall cost of transportation. However, the introduction of GST on logistics services has eliminated several interstate taxes, reducing the cost of transport.

Seamless and Organised

Since more businesses are registering under GST, the logistics sector is more organised and works seamlessly with proper records.

Better Transportation

Transportation before the introduction of the transport GST rate took longer, as several checkpoints were present to collect taxes. With the elimination of these checkpoints, transportation will be speedier.

WareIQ Offers Better and Smarter Logistics Solutions

HowWareIQ is a Y-Combinator-backed eCommerce full-stack platform offering multi-channel fulfillment across D2C, Marketplaces, Quick Commerce, and B2B (General Trade & Modern Trade)

Our solution offers:

• Pan-India network of Seller Flex & FAssured compliant across 12+ cities operated by WareIQ and shipping partners for last-mile delivery across 27000+ pin codes
• Multi-Channel Fulfillment Platform with plug-and-play integrations across marketplaces (Amazon, Flipkart, Myntra, Nykaa, etc.), D2C platforms (Shopify, Magento, Woocommerce, etc.), WMS, and ERPs to support fulfilment across distributors, flagship stores and eCommerce channels with analytics capabilities to assess operational performance
• Inventory LogIQ: AI-led multi-channel inventory planning solution to minimise stockouts and automate replenishment
• Leverage the tech-enabled returns QC solution to capture, centrally store, and auto-index HD media evidence of damaged or missing returned products and eliminate marketplace claims rejections.
• A host of seller enablement and support – dedicated account manager, APOB/PPOB registrations, GST registration, NDR & COD verification, etc.

Conclusion

India’s logistics sector drastically changed after GST was introduced in 2017. Businesses also have benefitted from GST regulations introduced by the government. No matter the mode of transportation, GST is applicable. Different modes of transport have different GST rates, ranging from 5% to 18%. However, certain exemptions are provided by the government for agricultural and essential goods and equipment for defence or medical emergencies. GST has removed unnecessary interstate taxes, leading to faster and more streamlined logistics operations. 

Suggested – Freight Charges HSN Codes in Shipping

FAQs About Logistics GST Rate

Supercharge your fulfilment with WareIQ now, contact our team.

Contact Us