The GST Council has Revised GST to ease the tax burden on freight services, a move expected to soften logistics costs for Exporters. New Tax slabs come as a relief at a time when India’s $60.2 Billion worth of Export to US faces 50 percent Tariff. Let’s Breakdown all the key updates below.
Freight Gets Cheaper: GST 2.0 Slashes Tax to 5% with
Earlier, this was taxed at 12% with ITC. Supply of transport of goods in containers by rail by any person other than Indian Railways, now attracts 5% without ITC and 18% with ITC.
Key Updates of GST 2.0
Road Haulage
- Third-party insurance of goods carriages too moves down to 5% from 12%, reducing vehicle running costs for fleet operators.
Rail Movement
- Supply of transport of goods in containers by rail by any person other than Indian Railways 5% without ITC and 18% with ITC.
Multimodal Logistics within India
- Supply of Multimodal transport of goods within India now attracts 5%, where no leg of transport is through air, with restricted ITC (i.e. 5% of input services of goods transportation) or 18% with ITC.
Goods Transport Agency
- Goods Transport Agency services, widely used in bulk cargo movement, have been revised from 5% without ITC or 12% with ITC to 5% without ITC or 18% with ITC. No Compensation Cess applies to these categories.
REVISED ITC RATES FOR LOGISTICS SERVICES | |||
| S.No. | Description of Service | Old Rate | Revised Rate |
| 1 | Supply of Transport of goods by GTA | 5% without ITC (RCM/FCM) OR 12% with ITC | 5% without ITC (RCM/FCM) OR 18% with ITC |
| 2 | Supply of transport of goods in containers by rail by any person other than Indian Railways | 12% with ITC | 5% without ITC OR 18% with ITC |
| 3 | Supply of transportation of natural gas, petroleum crude, motor spirit, high speed diesel or ATF through pipeline | 5% without ITC OR 12% with ITC | 5%, where no leg of transport is through air, with restricted ITC (i.e. 5% of input services of goods transportation). OR 18% with ITC |
| 4 | Supply of Multimodal transport of goods within India | 12% with ITC | Not stated |
| 5 | Local delivery services | 18% with ITC | 18% with ITC (no change) |
| 7 | Supply of Service of third-party insurance “goods of carriage” | 12% with ITC | 5% with ITC |
Conclusion
While the tax structure simplifies compliance, exporters will need to weigh the choice between lower rates without ITC and higher slabs with credit. This recalibration is clearly aimed at giving exporters a breather at a time of global headwinds. In the near term, shippers can expect some relief in freight bills, while in the longer run, the revised structure could help Indian goods stay competitive in overseas markets.
Disclaimer
This article is for general informational purposes only and is based on publicly available sources at the time of writing. The GST 2.0 framework is a developing policy area and subject to frequent updates, clarifications, and amendments by the GST Council and government authorities. Readers are strongly advised not to treat this as professional tax or legal advice. Please consult a qualified Chartered Accountant (CA) or tax professional for guidance tailored to your specific business needs before making any financial or compliance decisions.
Source
- The Economic Times
- Economic Times Manufacturing
- Times of India
