What is the GST Rate on Freight Charges? Understanding RCM & Exemptions

Did you ever check your invoice of logistics and ask yourself, ‘Why the GST on freight charges?’ You're not alone. It is important to know about GST on freight charges, whether you are a manufacturer who is shipping raw materials, a retailer who is shipping goods, or a service provider who is handling logistics. It affects your pricing, compliance and overall profitability. That’s why you need to understand everything about GST on freight services. 

In this blog, we will discuss the applicability of GST on freight charges, the latest GST rates on freight charges and how to avail ITC on freight charges. 

Why Freight Charges Come Under GST

One of the important components of a supply chain is the transportation of goods. The government considers it a service, and therefore, it is under GST. GST is imposed when the service is offered by a Goods Transport Agency (GTA); however, the amount and the person to pay GST depend on the nature of the transaction.

If you are scratching your head and wondering, does it mean that you have to pay freight GST on your invoice? The answer is, it depends. Let's break it down.

Is GST Applicable on Freight Charges in the Invoice?

Yes, in the majority of situations, GST applies to the freight cost in the invoice, but the applicability depends on the mode of transportation and the person who covers it.

Reverse Charge Mechanism (RCM) on Freight

Under GST, freight services may come under the Reverse Charge Mechanism (RCM). This indicates that you, as the recipient of the service, pay GST to the government rather than the transporter himself.

RCM is implemented in cases where the goods are delivered by a GTA and the recipient falls under one of the following categories:

• A factory which is registered under the Factories Act, 1948
• A society which is registered under the Societies Registration Act or under any other law
• A co-operative society
• A person registered under the Goods and Service Tax Act
• A body corporate
• A partnership firm
• An Association of persons
• A casual taxable person

GST on Air Freight

India's export logistics depend on air freight. But do you need to pay GST on it?

Here's how it works in 2025:

Air Freight	GST Applicable
Domestic air freight	18% GST applies to the transport of goods via air in India.
Export air freight (international)	No GST is levied in case goods are being transported out of India to a foreign destination.

Let’s understand with an example; 

Suppose goods are shipped by air from Delhi to Mumbai, 18% GST is applicable. 

But when you export the goods from Delhi to Dubai, it is tax-free.

Input Tax Credit (ITC) on Freight Charges

In the case you are registered under GST, whether you are paying GST through RCM or directly, you are eligible for Input Tax Credit (ITC); however, you must be using freight service for business purposes. 

A few quick checks before you claim ITC:

• The freight service must be used for taxable supplies.

• You must have a valid GST invoice.

• The supplier or GTA must have uploaded their GSTR-1 properly.

• Freight should not be part of an exempt or non-GST supply.

Many businesses fail to get ITC due to small errors in GSTR-2B or invoice data; thus, you should cross-check all the data before filing it.

List of Freight Services Exempt from GST

Following is the list of goods on which GST is completely exempted from freight service: 

• Transportation of agricultural produce

• Milk, salt, or food grains, including flour, pulses, and rice

• Organic manure

• Newspapers and magazines

• Relief materials for natural disasters

Latest GST Rate on Freight Service (2025 Update) 

The following are the GST rates on freight services in 2025: 

• 5% GST (without ITC) for transport services provided by a Goods Transport Agency under reverse charge.

• 18% GST (with ITC) for GTA services when opting for forward charge.

• 18% GST on domestic air freight services.

• Nil GST for export freight services (air or sea) to encourage exports.

• 5% GST for rail and coastal freight.

Read More: Latest GST Rates List for All Items

Closing Notes 

Dealing with GST on freight charges might seem confusing at first, but when you know the basics of GST on freight charges, such as GST rates, applicability and the exemptions, then it is very easy. Whether you are dealing in domestic or overseas transportation of goods through air, being GST-compliant helps you avoid penalties and claim every bit of eligible ITC.

Munim Accounting and Billing Software is recommended to you to ease your GST calculations on freight. It allows you to generate invoices with freight charges, generating e-invoices, e-way bills and much more, along with accounting. Sign up now! 

Frequently Asked Questions 

Is GST applicable to air freight​?

Yes, there is a GST of 18% on domestic air freight services in India. However, the current rules exempt export air freight, that is, when goods are shipped from India to a foreign location.

Is GST applicable to export ocean freight?​

No, export ocean freight is exempt from GST. When goods are exported from India via any medium of transportation, they come under a zero-rated supply. These exemptions help exporters to offer a competitive price in the market. 

Is GST applicable to import ocean freight​?

Yes, GST is levied on import ocean freight through the Reverse Charge Mechanism (RCM). In cases where suppliers as well as transporters are based out of India, importers are required to pay 5% GST.

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