GST on Freight Calculator — RCM vs Forward Charge

Under Section 2(52) and Notification 11/2017, a Goods Transport Agency (GTA) is any entity providing road freight transport services and issuing a consignment note (Bilty / LR). Individual truck owners renting vehicles without issuing a consignment note are not GTAs and are exempt under Notification 12/2017.

Under 5% RCM, the transporter issues a 0% tax bill; the recipient (consignor or consignee who pays the freight) deposits the 5% GST directly with the government and can claim ITC. Under Forward Charge, the GTA collects the tax on the invoice (either 5% without ITC or 12% with full ITC) and deposits it with the tax department.

Under Notification 13/2017-Central Tax (Rate), when GTA services are provided to any factory registered under the Factories Act, 1948, or any registered business, society, or partnership firm, 100% of the GST is payable by the recipient under 5% RCM, unless the GTA has submitted Annexure V to opt for Forward Charge.

RCM does not apply to unregistered individuals. If the GTA is registered and has opted for forward charge, they collect GST. If the GTA operates under RCM, services provided to unregistered individuals or non-taxable entities are completely exempt from GST under Entry 21A of Notification 12/2017.

GTAs wishing to pay tax under Forward Charge (5% without ITC or 12% with ITC) must file an annual online declaration in Annexure V on the GST portal before 15th March of the preceding financial year. This declaration is valid for the whole financial year and cannot be changed mid-year.

5% without ITC suits transport brokers and small fleet operators with negligible capital purchases. 12% with full ITC is optimal for fleet owners regularly purchasing new commercial trucks, tyres, and repair services, enabling Input Tax Credit recovery on those purchases. Diesel and other petroleum products are outside GST, so no ITC is available on fuel.

Under Notification 12/2017-Central Tax (Rate), freight services for transporting agricultural produce, milk, salt, food grains (including rice, wheat, and pulses), organic manure, newspapers or magazines registered with RNI, and defence/military equipment are 100% exempt from GST.

No. Historically, single consignments up to ₹1,500 and individual consignments up to ₹750 were exempt. However, the GST Council withdrew this exemption effective 18th July 2022 (Notification 04/2022-Central Tax (Rate)). All non-exempt commercial road freight is now taxable regardless of amount.

Under Section 12(8) of the IGST Act, the Place of Supply for transport to a registered business is the recipient’s registered location. If the GTA and recipient are registered in the same state, CGST (2.5% or 6%) + SGST (2.5% or 6%) applies. If in different states, IGST (5% or 12%) applies.

Under CGST Rule 138, any consignment valued over ₹50,000 moving by road requires an E-Way Bill. The Bilty (LR) number, vehicle registration number, and tax invoice generated for freight must match Part-B of the E-Way Bill to prevent vehicle detention or 200% penalties under Section 129.