A lorry drops 400 boxes of tiles at your godown, and with them comes a bill from the transporter for ₹48,000 with no GST charged. The bill says “GST payable by recipient under reverse charge”. That line means the 5% GST on the freight is now your liability, not the transporter’s.
In short: when a goods transport agency (GTA) has not opted to charge GST itself, and you are a registered business, a factory, a company, a partnership firm or one of the other notified recipients, you pay 5% GST on the freight under reverse charge (RCM). You pay it in cash through GSTR-3B and, if the goods are for business, you claim the same amount back as input tax credit in that return.
Who pays GST on GTA freight under reverse charge?
A GTA is a person who transports goods by road and issues a consignment note (a bilty or LR). A truck owner who only rents out a vehicle without issuing a consignment note is not a GTA.
Under the reverse charge entry for GTA services, the recipient pays the tax when the person paying freight is one of these:
any factory registered under the Factories Act, 1948
any society, including a co-operative society
any person registered under GST, including a composition dealer
any body corporate, such as a private or public company
any partnership firm, registered or not, including an association of persons
any casual taxable person
The test is who pays the freight, not who owns the goods. If your supplier sends goods “freight paid” and the GTA bills the supplier, the RCM sits with the supplier. If the terms are “to pay” and you settle the bilty, it sits with you.
When does reverse charge not apply to GTA services?
Three situations take a freight bill out of your RCM working.
The GTA has opted for forward charge. A GTA can choose to charge GST on its own invoices by filing a declaration in Annexure V. Once it has done so, it charges you GST like any other supplier and you take credit through GSTR-2B. No RCM arises on those bills.
The recipient is an unregistered person outside the list above. GTA services to an unregistered individual, for example someone shifting household goods, are exempt. So are GTA services to government departments and local authorities that hold GST registration only to deduct TDS.
The goods themselves are exempt for transport. Transport by road of agricultural produce, milk, salt, food grains including flour, pulses and rice, organic manure, newspapers, relief material and defence equipment is exempt.
One exemption that no longer exists: freight up to ₹1,500 per consignment, or ₹750 for all goods to a single consignee, used to be exempt. That exemption was withdrawn from 18 July 2022. Small LR bills from local transporters are now taxable and are the ones most often missed.
What changed for GTA rates with GST 2.0?
Notification 15/2025-Central Tax (Rate), effective 22 September 2025, changed the forward charge option for GTAs that take input tax credit. The two options now are:
GTA’s choice | Rate | Who pays the tax | Credit for you as recipient |
|---|---|---|---|
Not opted for forward charge (default) | 5% (2.5% CGST + 2.5% SGST, or 5% IGST) | You, under reverse charge | Yes, after you pay the RCM, if used for business |
Forward charge without ITC for the GTA | 5% | GTA, on its invoice | Yes, through GSTR-2B |
Forward charge with ITC for the GTA | 18% (earlier 12%) | GTA, on its invoice | Yes, through GSTR-2B |
The rate under reverse charge did not change. What changed is the cost of the other option. A GTA that earlier charged 12% with credit now charges 18%. For a business that claims all its ITC, the difference is mostly cash flow. For a business that cannot take credit, such as a composition dealer or a trader in exempt goods, 18% is a real cost compared with 5%, so ask transporters which option they have chosen before you sign a rate contract. The notification text is on CBIC’s tax information portal.
How do you tell from the bill whether you owe RCM?
Do not go by habit, and do not go by whether GST appears on the bill. Check three things on every transporter’s invoice:
The GTA’s GSTIN and the tax lines. A forward charge invoice shows CGST and SGST, or IGST, at 5% or 18% and the transporter will report it in GSTR-1, so it reaches your GSTR-2B.
The reverse charge declaration. An RCM invoice shows freight without tax and states that tax is payable by the recipient. Some smaller transporters leave this out; the liability is still yours if the GTA has not opted for forward charge.
The option for the year. GTAs exercise or change their option between 1 January and 31 March for the next financial year, through Annexure V (to move to forward charge) or Annexure VI (to go back to reverse charge). Once Annexure V is filed, it continues for later years until the GTA files Annexure VI. Keep a copy of the transporter’s declaration on file for each regular transporter.
The common mistake in client books: the transporter charges 5% GST on the invoice and the accountant also books RCM on it, so the tax is paid twice.
Worked example: booking RCM on a ₹48,000 freight bill
Say you run a tiles dealership in Rajkot, organised as a partnership firm and registered under GST in Gujarat. In October 2026 you receive two GTA bills, neither of which has opted for forward charge:
Bill A: ₹48,000 freight for tiles brought from Morbi to Rajkot by a Gujarat-registered GTA. Intra-state, so CGST 2.5% and SGST 2.5%.
Bill B: ₹30,000 freight for sanitaryware brought from Rajasthan by a Rajasthan-registered GTA. The GTA and you are in different states, so IGST 5%.
The RCM works out like this:
Bill | Freight | CGST | SGST | IGST | Total RCM |
|---|---|---|---|---|---|
A (Morbi) | ₹48,000 | ₹1,200 | ₹1,200 | - | ₹2,400 |
B (Rajasthan) | ₹30,000 | - | - | ₹1,500 | ₹1,500 |
Total | ₹78,000 | ₹1,200 | ₹1,200 | ₹1,500 | ₹3,900 |
For Bill A, the entries are:
Freight booked: Freight Inward A/c Dr ₹48,000, to GTA (party) A/c ₹48,000. The party is owed only the freight, because no tax was charged.
RCM liability raised: Input CGST (RCM) A/c Dr ₹1,200 and Input SGST (RCM) A/c Dr ₹1,200, to CGST Payable (RCM) A/c ₹1,200 and SGST Payable (RCM) A/c ₹1,200.
Tax paid: CGST Payable (RCM) A/c Dr ₹1,200 and SGST Payable (RCM) A/c Dr ₹1,200, to Electronic Cash Ledger (or Bank) ₹2,400.
Bill B follows the same pattern with ₹1,500 of IGST. Two points matter here. First, RCM must be paid in cash through the electronic cash ledger; you cannot set it off against your existing ITC. Second, the credit is available in the same month you pay, so the net cash effect over the month is nil for a fully taxable business. The ₹3,900 leaves your cash ledger and returns as ITC you use against output tax.
If the same ₹48,000 bill came from a GTA charging 18% under forward charge, you would pay the transporter ₹56,640 (₹48,000 plus ₹8,640 GST) and claim ₹8,640 through GSTR-2B. Same freight, but ₹6,240 more cash tied up until your next return.
When is RCM due if you have not paid the transporter yet?
For services under reverse charge, the time of supply under Section 13(3) of the CGST Act is the earlier of two dates: the date you make the payment, or the date immediately after 60 days from the date of the supplier’s invoice.
So unpaid freight does not postpone the tax. Take a GTA invoice dated 5 August 2026 that your firm has not paid because of a dispute over breakage. Sixty days from 5 August ends on 4 October, so the time of supply is 5 October 2026. The RCM goes into your October 2026 GSTR-3B even though the transporter is still waiting for its money. When you finally pay in December, there is no second liability.
Monthly transporter statements that sit for approval are where this usually goes wrong.
How does RCM on GTA show up in GSTR-3B?
Two tables carry it:
Table 3.1(d), inward supplies liable to reverse charge: the freight value and the tax you owe. In the example, ₹78,000 value, ₹1,200 CGST, ₹1,200 SGST and ₹1,500 IGST.
Table 4A(3), ITC on inward supplies liable to reverse charge (other than imports): the credit you claim on the same tax.
Since the August 2024 return period, the GST portal keeps an RCM Liability/ITC Statement that compares what you declared in 3.1(d) with what you claimed in 4A(2) and 4A(3). If you claim more RCM credit than the RCM tax you paid, the statement goes negative. GSTN’s advisory of 29 December 2025 says a negative closing balance blocks GSTR-3B filing until you pay the shortfall in 3.1(d) or reduce the credit claimed. The practical rule: never put an RCM credit in 4A(3) unless the matching tax is in 3.1(d) of the same or an earlier return.
Also check the credit itself. RCM tax paid on freight for goods that go into personal use, or into a blocked category, does not become eligible because you paid it. Our note on blocked ITC under Section 17(5) covers those cases.
A month-end routine for GTA freight
Pull every freight and cartage entry for the month from the purchase register and the cash book, including small cash-paid LR bills.
Mark each transporter as RCM or forward charge based on its current declaration, and flag any bill where the treatment differs from last month.
List unpaid GTA invoices older than 60 days and add their RCM to this month.
Check that forward charge GTA invoices appear in your GSTR-2B. Use IMS to accept or keep pending any that do not match your books.
Pay the RCM in cash, fill 3.1(d) and 4A(3) with matching figures, and check the RCM Liability/ITC Statement before filing.
Where hisabkitab fits in
The slow part of GTA compliance is finding the bills, not computing 5%. In hisabkitab, AI-based OCR reads transporters’ bills and PDFs into the purchase register, so cash-paid LRs do not stay in a drawer. The GST module flags wrong GSTINs and duplicate invoices, reconciles GSTR-2B against your books for forward charge GTAs, and gives you ITC and liability reports before you file GSTR-3B from the same data.
If your CA handles several of your entities, the CA module gives one login across all of them, with an audit trail on each change. For day-to-day ledgers, see our bookkeeping software.
Frequently asked questions
Is GST on GTA 5% or 18% in 2026?
Both rates exist. Under reverse charge, or when a GTA opts for forward charge without taking ITC, the rate is 5%. A GTA that opts for forward charge with ITC charges 18%, up from 12% before 22 September 2025.
Does a composition dealer pay RCM on GTA freight?
Yes. A composition dealer is a registered person, so it pays 5% under reverse charge on GTA services. It cannot claim that tax as ITC, so the 5% is a cost.
Is freight below ₹1,500 per consignment still exempt?
No. That exemption was withdrawn from 18 July 2022. GTA freight is taxable whatever the bill amount, unless the goods or the recipient fall in an exempt category.
Can I pay RCM on GTA using my ITC balance?
No. Reverse charge tax must be paid in cash through the electronic cash ledger. You can then claim it as ITC in the same GSTR-3B if the freight relates to your business.
Do I need to issue a self-invoice for RCM on GTA?
Not for a registered GTA, because the GTA issues its own invoice or consignment note. Self-invoicing applies when you buy from an unregistered supplier under reverse charge.
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