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Transport Sector

Taxation on transport sector at a national level will result in
• more efficient cross-state transportation
• Reduce paperwork for road transporters
• bringing down logistics costs

Presently, all 29 states collect taxes at different rates on goods that move across their borders. As a result, tax on freight is collected multiple times. Also, there are long delays at interstate checkpoints owing to review by state authorities who examine and apply the relevant taxes and other levies. Truck delays are an average 5 to 7 hours at interstate checkpoints. The planned GST system for transport sector seeks to replace around 15 state and federal taxes and tariffs for a single tax at the point of sale.

Let us look at Some Areas Where Gst Impact :


• Cab rides could get marginally cheaper for customers. The incidence of tax will come down to 5% from 6% for bookings made on cab aggregators like Ola and Uber.
• 100% tax will be payable by E-commerce aggregator under reverse charge mechanism for service of Radio taxi or Passenger Transport Services provided by a Taxi driver or Rent-a-cab operator to any person.
• Buses and pick-up vans, carrying more than 10 individuals, will be subjected to no extra cess.


• The tax rate for economy class flight tickets lowered to 5%.
• Business class tickets will attract a higher tax at 12%.

Comparison of Prices

With this reduction in rates on domestic air travel, budget traveling will clearly get better. A frequent flier will definitely find the impact of GST on air fares. Also, the reduction in tax rates is a positive development for low-cost domestic carriers as a major portion of the revenue generated from airlines comes from economy travelers.

• Airlines can only claim Input Tax Credit on input services for the economy class.
• But for the business class, they can claim ITC for only spare parts, food items, and other inputs, apart from fuel.


The transport sector is the most crucial part of a business chain. Roadways will have an advantage in GST on short distances while Railways will see the impact on long distance travels.

• Non AC train travel (including in local trains and metro) has been exempt

• AC train travel will attract 5 %. Ticket prices for AC trains will increase marginally as current service tax is at 4.5 %.

• The rate is kept low as they will not be allowed Input Tax Credit

Exemptions under railways

• Travelling in metro;

• Local trains; and

• Religious travel including Haj yatra


GST will be applicable on –

• Transport of coastal goods;
• Transport through National waterways; or
• Transport through Inland waterways services


Under GST, Transport sector is closely monitored and the tax rates are apt. Transportation sector has accepted the changes made under GST by the government of India.

In case you are confused about GST as a business owner, then don’t worries we xiraerp provide GST enabled software system for your transportation business.