GST and e-way bill for goods transport: a shipper's guide

GST touches road freight twice. First, the freight service itself is taxed, through rules specific to a Goods Transport Agency. Second, the goods on the truck must usually travel with an e-way bill. Both are routine once understood, and both cause real trouble when handled carelessly: a wrong GST basis on freight invoices can cost input credit, and an expired e-way bill can hold a truck at the roadside.

This guide explains each in plain terms. It is general information, not tax advice; confirm your specific treatment with your GST adviser and the current notifications.

Part 1: GST on freight

What is a GTA?

A Goods Transport Agency (GTA) is, broadly, a person who provides a service in relation to the transport of goods by road and issues a consignment note, by whatever name called. The consignment note is the defining feature. A truck owner who simply hires out a vehicle without issuing a consignment note is treated differently from a GTA.

Reverse charge (RCM)

Under the reverse charge mechanism, the recipient of the service pays GST directly to the government, rather than the GTA charging it on the invoice.

• The rate under RCM is 5 per cent, and the GTA does not take input tax credit on this basis.
• RCM applies when the person paying freight falls in a specified category, which includes a factory registered under the Factories Act, a registered society, a co-operative society, a GST-registered person, a body corporate, a partnership firm and a casual taxable person.
• A recipient paying under RCM can generally claim input tax credit of that tax, subject to the normal conditions.

Forward charge

A GTA may instead opt for forward charge. It then charges GST on its own invoice and can take input tax credit on its inputs.

• The forward-charge rate with input tax credit is a higher rate notified by CBIC. It has been revised over time, so check the current CBIC notification for the rate in force.
• The option is exercised by a declaration for the financial year, filed within the timeline the notification specifies. Once exercised, it applies to all the GTA’s services for that year.

Exemptions

Some GTA services are exempt, for example transport of certain agricultural produce and some essential goods, and some small consignments. The list and conditions are in the rate notifications published by CBIC, and they have been amended over time.

SAC codes

Goods transport services fall under SAC heading 9965. You will also see GTA services invoiced under codes within the supporting-services heading, such as 996791. Ask your transporter which code it uses and confirm with your adviser.

What a shipper should do

1. Ask each transporter, in writing, whether it is on RCM or forward charge for the current year.
2. If RCM, make sure your accounts team pays the tax under reverse charge and reports it correctly.
3. If forward charge, check the GST on the invoice and claim credit where eligible.
4. Keep consignment notes; they support the GTA treatment.

Our guide on how freight is priced shows where GST sits in a freight quote.

Part 2: The e-way bill

When it is required

The e-way bill rule is Rule 138 of the CGST Rules. In summary:

• An e-way bill is required for movement of goods where the consignment value exceeds ₹50,000.
• States may notify a different threshold for movement within the state, so check the rule for intra-state moves in your state.
• Some movements need an e-way bill regardless of value, for example certain inter-state movements to job workers and of handicraft goods by specified persons.
• Some goods are exempt, and certain movements (for example over very short distances in some situations, or by non-motorised conveyance) are exempt as the rules specify.

Consignment value generally includes the tax charged on the invoice but excludes the value of exempt goods on the same invoice.

Part A and Part B

The bill is complete only when both parts are filled, except in the short-distance case below.

Who generates it

• The registered person causing the movement, as consignor or consignee, generates the e-way bill.
• If neither has generated it and the value exceeds the threshold, the transporter must generate it on the basis of the invoice or challan.
• A consignor can authorise the transporter to fill Part B, or the full e-way bill.

The 50 km Part B exception

Part B need not be filled when goods move up to 50 km within the same state or union territory from the consignor’s place of business to the transporter’s place of business for onward transport, or from the transporter’s place to the consignee. Part B must then be updated before the goods start the onward journey.

Validity

Validity runs from when Part B is first entered.

A “day” ends at midnight of the relevant date, so a bill generated late in the evening effectively gives less running time on its first day. Use actual road distance; our distance calculator helps, and the ODC guide covers over-dimensional moves.

Extension

If goods cannot reach within validity because of a breakdown, accident, transshipment delay or similar reason, the e-way bill can be extended by the current transporter within a window of a few hours before or after expiry, stating the reason and the current location. The portal has also introduced overall limits on how old a document can be and how long a bill can be extended; check current advisories on the e-way bill portal.

Change of vehicle, multi-vehicle and consolidated bills

• Change of vehicle: if goods move to another truck, update Part B with the new vehicle number.
• Multi-vehicle: if one consignment is split across several vehicles, for example after a breakdown or at a hub, the multi-vehicle option records each vehicle and its share of the goods against the same bill.
• Consolidated e-way bill: a transporter carrying several consignments in one vehicle can generate a single consolidated e-way bill that lists the individual bills. This is routine in part-load line-haul.

E-invoice link

Businesses required to issue e-invoices report the invoice to the Invoice Registration Portal and receive an IRN. The e-way bill can then be generated using the IRN, with Part A details carried across from the e-invoice, and only transport details added. This reduces errors between the invoice and the e-way bill.

Cancellation and rejection

An e-way bill can be cancelled within a short window after generation if goods are not moved or the details are wrong, provided it has not been verified in transit. The recipient can reject a bill generated against it within the time the system allows. Check current time limits on the portal.

What happens at inspection

Officers may intercept vehicles and verify the e-way bill and documents. If goods move without a valid e-way bill or with serious discrepancies, the goods and vehicle can be detained or seized under Section 129 of the CGST Act, and released only on payment of the applicable penalty or on furnishing security. Beyond the penalty, the delay itself often costs more: a held truck misses its delivery and the customer’s line waits.

Common mistakes

• Wrong GSTIN or pin code of the recipient, causing mismatches
• Generating Part A but forgetting Part B before the truck leaves
• Using straight-line distance, so validity runs out mid-journey
• Not marking over-dimensional cargo as ODC, so validity is far too short
• Letting the bill expire while goods wait at a hub or checkpost
• Invoice value, quantity or HSN not matching the e-way bill
• Treating the ₹50,000 threshold as per vehicle rather than per consignment
• Paying RCM when the transporter is on forward charge, or the reverse

Checklist

For freight GST:

• Each transporter’s RCM or forward-charge basis confirmed in writing for this year
• RCM liability paid and reported where applicable
• Forward-charge invoices checked for rate and GSTIN
• Consignment notes filed with freight bills

For each e-way bill:

• Threshold and any state-specific rule checked
• Part A matches the invoice: GSTINs, value, HSN, pin codes
• Part B filled with the correct vehicle before movement (unless within the 50 km exception)
• Validity calculated on road distance, ODC marked where relevant
• Plan in place to extend if delayed
• Multi-vehicle or consolidated bill used correctly at hubs
• E-invoice IRN used to generate the bill where applicable

Our GST and e-way bill helper estimates validity for a route. For a quote on your lane, request a quote.