Changes in GST Rate of Goods Transport Agency (GTA) / GST Rate
Changes in the Transportation Sector – 56th GST Council Meeting
Introduction
The 56th meeting of
the GST Council was held on 3rd September 2025 at Sushma Swaraj Bhavan,
New Delhi, under the chairpersonship of Union Finance & Corporate
Affairs Minister Smt. Nirmala Sitharaman. The Council reviewed GST tax
rates across sectors with a special focus on transportation services, as
this sector directly impacts both businesses and the common man.
The Council’s
recommendations aimed at simplifying tax structures, providing relief, and
improving credit flow by offering service providers the option of choosing
between lower rates without ITC or standard rates with full ITC.
Changes in
GST Rates – Transportation Sector
|
S.
No.
|
Service
Description
|
Earlier
Rate
|
Revised
Rate
|
|
1
|
Air
transport of passengers (other than economy class)
|
12%
with ITC
|
18%
with ITC
|
|
2
|
Passenger
transport by motor vehicle (fuel cost included)
|
5%
with ITC of input services (same line of business) / 12% with ITC
|
5%
with ITC of input services (in the same line of business) / 18% with ITC
|
|
3
|
Transport
of goods in containers by rail (other than Indian Railways)
|
12%
with ITC
|
5%
without ITC / 18% with ITC
|
|
4
|
Transport
of petroleum crude, natural gas, HSD, ATF etc. through pipeline
|
5%
without ITC / 12% with ITC
|
5%
without ITC / 18% with ITC
|
|
5
|
Transport
of goods by GTA
|
5%
without ITC (RCM/FCM)
|
18%
with ITC (option continues for 5% without ITC)
|
|
6
|
Supply
of Renting of any motor vehicle
(with
operator) of any motor vehicle
designed
to carry passengers where the
cost
of fuel is included in consideration
|
5%
with ITC of input services (same line of business) / 12% with ITC
|
5%
with ITC of input services (in the same line of business)/ 18% with ITC
|
|
7
|
Renting
of goods carriage (with operator, fuel included)
|
12%
with ITC
|
5%
with ITC of input services (in the same line of business) / 18% with ITC
|
|
8
|
Multimodal
transport of goods within India
|
12%
with ITC
|
5%
(restricted ITC, if no air leg) / 18% with ITC (if air leg involved)
|
FAQs on
Transportation Sector Changes
Q.1 – Will passenger
transportation services be taxed at 18%?
No. Passenger transport
services will continue at 5% without ITC, but operators can opt for
18% with ITC.
Q.2 – Is dual rate option
available for air passenger transport?
No. For air travel,
the rate remains 5% for economy class and 18% for other than economy
class, with no option to choose.
Q.3 – Is 18% applicable
to GTA services?
GTA services will
continue at 5% without ITC, but GTAs can opt for 18% with ITC.
Q.4 – What is the GST
rate for container train operators (CTO)?
CTOs may choose 5%
without ITC or 18% with ITC.
Q.5 – What is the GST
rate for multimodal transport of goods?
5% with restricted ITC
if no air leg is involved.
18% with ITC
if air transport is part of the supply.
Q.6 – Why not exempt GTA
services completely from GST?
Exemption would block
ITC, increasing costs. Essential goods transport (like agricultural produce,
milk, etc.) is already exempted.
Conclusion
The changes announced in
the 56th GST Council Meeting reflect a balanced approach—relief for
passengers and flexibility for businesses. By giving service providers the
choice between lower tax without ITC and standard rate with ITC,
the Council has created a clearer and more efficient system.
This rationalization is
expected to reduce disputes, enhance credit flow, and bring uniformity
across different modes of transport, ultimately benefiting both the transportation
sector and the end consumers.
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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