Goods and Services Tax (GST) on the transport of goods and passengers through roads, railways, airways, and waterways attracts varied rates ranging from nil to 18%. Transportation plays a vital role in the economy, as any disruption in transport services can affect entire business operations. For instance, changes in fuel prices can have a significant impact on the costs of goods and services, disrupting supply chains.
Transport services, especially for passengers, also experience an effect on ticket prices due to GST, impacting the overall cost of travel. In this article, we will explore GST on different modes of transport, including goods transport, and its significance for businesses and individuals.
In India, the main modes of goods transportation are railways, airways, waterways, and roadways. Each of these modes serves different purposes depending on the type and urgency of the transport required.
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GST on air tickets is levied at different rates based on the class of travel:
For businesses, the GST paid on air travel can be claimed as an Input Tax Credit (ITC). Airlines can also claim ITC on input services for economy-class passengers, while business-class travel allows airlines to claim ITC on inputs such as food items and spare parts, except fuel.
GST on rail transport of passengers is charged based on the class of travel:
Similar to air travel, businesses can claim ITC on rail travel when used for business purposes.
Passenger road transport services attract different GST rates depending on the type of transportation. Below are the major GST rates for road transport:
The transportation of goods via air, road, rail, or inland waterways may either attract GST or be exempt depending on the nature of the goods and services. Some goods are exempt from GST on transport, such as:
Additionally, household goods and goods transported by unregistered persons are exempt from GST.
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A Goods Transport Agency (GTA) refers to an agency that issues a consignment note and provides services for the transportation of goods via road. The GST rates for a GTA are as follows:
Other applicable GST rates include:
GST on transport plays an essential role in determining the cost of goods and services. Businesses must stay informed about the applicable GST rates on different modes of transport to ensure proper compliance and claim available benefits like the input tax credit. Businesses and individuals must know the required documents for goods transport and the exemptions available under the GST framework.
The GST rate on economy class air tickets is 5%, while business class tickets are subject to 12% GST.
Yes, goods such as relief materials, military equipment, food grains, and agricultural produce are exempt from GST when transported by air or rail.
A consignment note is a document issued by a Goods Transport Agency (GTA) as proof of receipt of goods for transport by road.
An eWay bill is a mandatory document generated for the movement of goods by GST-registered businesses. It ensures compliance with GST rules during transportation.
Yes, businesses can claim ITC on transport services, including air and rail travel, if the transport is for business purposes. However, specific conditions apply based on the type of transport and services used.
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