Freight is generally not exempt from GST and is usually taxable at 5% (road/rail) or 18% (air/sea) when provided by a Goods Transport Agency (GTA). However, exemptions exist for specific items like agricultural produce, milk, salt, and disaster relief materials. The liability often falls on the recipient under a Reverse Charge Mechanism (RCM).
The GST rate on freight by Goods Transport Agencies is 5% (without ITC) or 12% (with ITC) under forward charge and 5% under reverse charge. Please refer to GST rates table above to find out the specific GST rates on all other freight charges.
Domestic freight transportation services are generally subject to the GST at a rate of 5%, or the HST at the applicable harmonized rate if made in a participating province, but may qualify for zero-rating in certain circumstances if they are part of an international freight movement.
In most cases, GST is applied to the taxable value of imports, which includes the cost of the goods, insurance and freight (CIF).
Most domestic transport and logistics services are taxable and attract the standard 10% GST. This includes: Freight and cargo handling within Australia.
Yes, GST is applied to freight charges in India.
Zero-rated supplies
From July 18, 2022, the exemptions for single carriage consignments up to INR 1,500 and/or single consignees up to INR 750 have been removed. As a result, any value of supplies made by a Goods Transport Agency will be subject to taxation under either the forward charge or reverse charge mechanism under GST.
International freight transport was zero-rated at the start of VAT in 1973. The zero rate also applied to related services such as the handling of cargo, the handling of exports and imports, and intermediary services in arranging any of these.
Dear Valued Customer, This is to inform you that notification No. 07/2021 – Central Tax (Rate) dated 30th September 2021 has not been extended beyond 30th September 2022, and this means that Export freight will now be taxable under GST.
It is the supply of goods and services that does not attract GST and allows no claim on ITC. Example: Bread, fresh fruits, fresh milk and curd etc. Services Tax Act, and includes non-taxable supply.
Step 1: Go to the “Sale Invoice” menu and click the “Add New” button to start a new invoice.
Key Points on Freight Charges GST
GST on Road Transport: Generally, GST on transport services for road are subject to a 5% GST rate. However, if an unregistered goods transport agency (GTA) provides the service, it may be exempt or fall under the reverse charge mechanism.
What is Exempt Freight? Exempt freight includes commodities that are perishable or that can expire. Things that haven't been processed, like dairy products and hay bales, are classified as exempt.
The GST exemption essentially allows the earmarking of transfers, made during lifetime or at death, that either skip a generation or are made in trust for multiple generations.
Currently, the GST Exemption Limit is set at Rs. 40 lakhs for goods and Rs. 20 lakhs for services. Businesses with annual revenues below these limits are not mandated to register for GST; however, they may opt to do so voluntarily.
The responsibility for paying GST on freight charges depends on the transportation service recipient. In most of cases, the consignor (sender) or the consignee (receiver) of the goods will be liable for the tax.
Under this temporary measure, grocery items like sandwiches, salads, energy bars, non-alcoholic beverages like coffee, tea, juice, and even certain alcoholic beverages like beer, wine, and cider will be exempt from GST/HST. However, alcoholic spirits like vodka, whiskey, and rum are not covered by the tax relief.
Rule 55 – Transportation of goods without issue of invoice
(4) Where the goods being transported are for the purpose of supply to the recipient but the tax invoice could not be issued at the time of removal of goods for the purpose of supply, the supplier shall issue a tax invoice after delivery of goods.
Cereals, edible fruits and vegetables (not frozen or processed), edible roots and tubers, fish and meat (not packaged or processed), tender coconut, jaggery, tea leaves (not processed), coffee beans (not roasted), seeds, ginger, turmeric, betel leaves, papad, flour, curd, lassi, buttermilk, milk, and aquatic feeds, and ...
Customers do not pay GST on goods and services that are GST‑free such as basic food, many medical and health services, some education courses, childcare, certain medical aids, and exports.
Common Examples of GST Exempt Transactions:
Financial services – Most banking services, interest payments, and insurance premiums. Residential rent – Rental income from residential properties. Donated goods and services – Items or services that are given away without payment.
GST on GTA services is generally 5% without ITC or 18% with ITC if the GTA opts to pay tax themselves; otherwise, the recipient pays under reverse charge. GTAs transporting exempt goods (e.g., agricultural produce) or low-value consignments below ₹1,500 may attract 0% GST.