RCM on freight under GST: a transporter's guide

Few topics confuse transport finance teams more than GST on freight. Is it 5% or 12%? Who pays — the transporter or the customer? What is reverse charge, and when does it apply? This is a plain-language guide for road transport operators. It is general information, not tax advice — confirm specifics with your advisor.

GTA and the two GST options

A Goods Transport Agency (GTA) — broadly, a transporter that issues a consignment note — can operate under GST in two ways: forward charge (the GTA charges and pays GST) or reverse charge (RCM) (the recipient of the service pays GST directly to the government). The choice affects rates, input credit and paperwork.

What reverse charge (RCM) means

Under RCM, the liability to deposit GST shifts from the supplier to the recipient. For specified GTA services to specified recipients (such as registered businesses, companies and factories), the customer pays GST on the freight directly — the transporter does not collect it on the invoice. This is why many manufacturers handle freight GST themselves rather than paying it to the carrier.

The rate question: 5% vs 12%

• 5% is the common rate associated with limited or no input tax credit on the GTA’s own inputs.
• 12% is generally associated with the GTA taking full input tax credit under forward charge.
• Which is better depends on how much input GST you actually incur — fuel, tyres, spares, insurance, technology — and whether your customers can use the credit.

The decision is an annual, business-wide one with a declared option, not something to toggle per invoice. Model both scenarios against your real cost base before choosing.

Where operators get caught out

• Invoicing GST under forward charge when the transaction actually falls under RCM — and vice versa.
• Not marking on the consignment note and invoice who is liable for the tax.
• Losing input credit by picking the wrong option for the cost base.
• Mismatches between the freight value on the Bilty, the invoice and the E-Way Bill.

Most freight-GST pain is not the rate — it is inconsistent data across the Bilty, the invoice and the return.

How a transport ERP reduces the risk

When booking, billing and accounts share one database, the GST treatment is applied consistently and the freight value ties out across the consignment note, the invoice and the E-Way Bill. In LogisticCube, billing and auto-accounting work from the same shipment record, so the numbers reconcile by construction instead of by manual cross-checking at return time. That is fewer notices, cleaner books and faster closes.

This article is general information for transport operators and is not legal or tax advice. GST rates, GTA rules and RCM applicability change and depend on your specific facts — verify current requirements on the official GST portal or with a qualified tax advisor.