GST on transportation charges in India depends on the mode of transport, whether it carries goods or passengers, and the service tier. Rates range from 5% to 18%, with some categories fully exempt.
The 56th GST Council meeting revised these rates, effective from 22 September 2025. The change removed the old 12% slab for Goods Transport Agency (GTA) services, business-class air travel, and rail container transport. It replaced it with an 18% option with ITC, alongside the existing 5% option without ITC.
The change aims to simplify transport taxation into a 5%/18% structure.
Key Takeaways
- GST on transportation ranges from 0% (exempt) to 18%, depending on mode, tier, and whether it’s goods or passengers.
- The 12%-with-ITC option for GTA services was withdrawn on 22 September 2025 and replaced with an 18%-with-ITC option; the 5%-without-ITC route is unchanged.
- Business, premium economy, and first-class domestic air travel moved from 12% to 18% GST; economy class stays at 5%.
- Non-AC public transport, economy rail travel, and international transport remain fully exempt from GST.
- No compensation cess applies to transportation services under the current structure.
- GTA services are taxed under the Reverse Charge Mechanism (RCM) by default, with the recipient paying GST, unless the GTA opts for forward charge.
What is the GST Rate on Transportation Services?
The table below shows the current GST rates on transportation after the September 2025 reform:
| Category | GST Rate |
|---|---|
| Non-AC public transport, economy rail, international transport | 0% (Exempt) |
| GTA services (default RCM / forward charge, no ITC) | 5% |
| AC passenger road transport, rail (AC/first class), domestic sea/water goods | 5% |
| App-based cab aggregators (Ola, Uber) | 5% |
| GTA services (forward charge, with ITC) | 18% |
| Business/premium/first-class domestic air travel | 18% |
| Air cargo and freight services | 18% |
| Vessel rental/charter for non-transport purposes | 18% |
| Economy class air travel (domestic and international) | 5% |
Note: No compensation cess applies to transportation services, so these rates are the total GST paid.
New GST Rates on Transportation After the September 2025 Reform
The September 2025 reform, part of GST 2.0, replaced the old three-tier structure (5%/12%/18%) with a simpler two-tier system (5%/18%) for most transportation categories:
| Transportation Category | Old Rate (Pre-Sept 2025) | New GST Rate |
|---|---|---|
| GTA services, forward charge with ITC | 12% | 18% |
| GTA services, RCM or forward charge without ITC | 5% | 5% (unchanged) |
| Business/premium/first-class domestic air travel | 12% | 18% |
| Economy class air travel | 5% | 5% (unchanged) |
| AC passenger road transport, forward charge with ITC | 12% | 18% |
| Rail container transport (non-Indian Railways operators) | 12% (single rate) | 5% without ITC or 18% with ITC |
| Air cargo services | 18% | 18% (unchanged) |
| Non-AC public transport, economy rail | Exempt | Exempt (unchanged) |
| International transport (goods and passengers) | Exempt | Exempt (unchanged) |
Note: GTA and airline services in these categories should no longer charge 12% GST after 22 September 2025.
GST on Road Transportation
A Goods Transport Agency (GTA) issues a consignment note and is liable for GST. Individual truck operators without consignment notes are exempt.
- Default (Reverse Charge): 5% GST, recipient pays and can claim ITC if used for business.
- Forward Charge, no ITC: 5% GST, GTA pays, no credit available.
- Forward Charge, with ITC: 18% GST (corrected from 12%), GTA pays, full credit available.
GTAs select their rate structure at the start of the financial year via Annexure V, and it carries forward until reversed.
Passenger Transport by Road:
- Non-AC public transport (buses, metro, local trains): exempt.
- AC passenger transport (AC buses, taxis): 5% without ITC, or 18% with ITC (corrected from 12%).
- App-based aggregators (Ola, Uber): 5% GST on rides.
GST on Rail Transportation
Railways are a crucial part of India’s logistics network, handling a significant share of freight and passenger movement.
Passenger Transport by Rail
- Economy class train tickets remain exempt.
- AC and first-class train travel attracts 5% GST.
Goods Transport by Rail
- General freight via Indian Railways is taxed at 5% GST.
- Container transport by rail operators other than Indian Railways moved from a single 12%-with-ITC rate to a 5% without ITC or 18% with ITC dual structure.
- Essential commodities (food grains, milk, salt, agricultural produce) remain exempt.
GST on Air Transportation
Air transport is vital for passenger movement and logistics, with different tax rates applicable.
| Class | Old Rate | Current GST Rate |
|---|---|---|
| Economy class (domestic and international) | 5% | 5% (unchanged) |
| Business, premium economy, and first class | 12% | 18% |
| International flights | Exempt | Exempt |
Air cargo services remain taxed at 18% GST, unchanged since this category was already at the higher slab.
Note: The applicable rate depends on the booking and payment date, not the travel date. A ticket booked before 22 September 2025 carries the old rate, even for a later flight.
GST on Sea Transportation
Water transport splits by purpose more than by tier, distinguishing actual transport service from vessel rental or charter.
- Domestic passenger sea/water travel: Largely exempt from GST.
- International sea travel: Exempt.
- Domestic cargo shipping: 5% GST without ITC when used directly for goods transport.
- Vessel rental or charter for non-transport purposes: 18% GST.
- International freight: Exempt, treated as a zero-rated supply.
Who is Liable to Pay GST on Transportation Services?
The liability to pay GST on transportation charges depends on whether the service falls under Forward Charge Mechanism (FCM) or Reverse Charge Mechanism (RCM).
- Under Forward Charge Mechanism (FCM): The service provider collects the tax and remits it through regular GST filing.
- Under Reverse Charge Mechanism (RCM): The recipient pays GST on behalf of the transporter.
For GTA services, businesses using a GTA that hasn’t opted for forward charge must pay GST under RCM. For passenger transport, the provider collects GST at the time of booking.
Input Tax Credit (ITC) on GST Logistics
Whether you can claim Input Tax Credit (ITC) on a transport service comes down almost entirely to which rate option was chosen, not the mode of transport itself.
- Available: The 18% GST option on GTA services (forward charge with ITC), air cargo at 18%, and business-class air travel now at 18%.
- Not available: The 5% GST GTA option (RCM or forward charge without ITC), and generally on 5% passenger road transport (cabs, AC buses).
Exemptions Under GST for Transportation Services
Several categories stay outside the GST net entirely, mostly to keep essential and public transport affordable.
- Public transport (non-AC buses, metro, government transport).
- Transport of essential goods (milk, salt, food grains, agricultural products).
- International transportation of goods and passengers.
- Individual truck operators without consignment notes.
- Economy class rail travel.
- Domestic sea/water passenger travel (largely exempt).
- Transport of used household goods for personal use.
