GST on Transport Services in 2026: GTA, Bus, Cab and Rent-a-Cab Rates

What is the GST rate on transport services in 2026?

It depends on what is carried and how. Goods transport by a GTA is taxed at 5% without input tax credit (ITC) or 18% with ITC; passenger transport ranges from exempt (non-AC buses, metered cabs, autos) to 5% (AC buses, radio taxis) and 18% for anything not covered by a specific entry.

The 56th GST Council’s PIB press release of 3 September 2025 moved the “with ITC” option for GTA services, passenger transport by motor vehicle with fuel, and renting of such vehicles from 12% to 18%, from 22 September 2025. Notification 15/2025-Central Tax (Rate) did this by raising central tax from 6% to 9% in serial 8 item (vi), serial 9 item (iii)(b) and serial 10 item (i) of Notification 11/2017.

Within a state, 5% shows as 2.5% CGST plus 2.5% SGST and 18% as 9% plus 9%; between states it is IGST. From 1 November 2026, Notification 06/2026-Central Tax (Rate), issued after the 57th Council meeting, adds entries for carrying passengers in, or renting, an electric vehicle where battery charging is included: 5% with limited ITC or 18%.

GST on GTA services: 5% or 18%, and who pays?

A GTA is any person who provides service in relation to transport of goods by road and issues a consignment note, whatever it is called (bilty, LR). It charges 5% without ITC or, if it opts for forward charge, 18% with ITC. If it has not opted, a business customer usually pays the 5% under reverse charge.

Serial 1 of Notification 13/2017-Central Tax (Rate) puts reverse charge on these recipients of GTA services:

• a factory registered under or governed by the Factories Act, 1948
• a registered society or a co-operative society
• any person registered under GST
• a body corporate
• a partnership firm, registered or not, including an association of persons (an LLP counts as a firm)
• a casual taxable person

Since 18 July 2022, reverse charge does not apply where the GTA has opted for forward charge and puts the Annexure III declaration on its tax invoice. How a GTA opts in, and how packing and loading are taxed within a move, are covered in our guide to GST on packers and movers.

In plain units: on a freight of 100, the 5% option adds 5 and the 18% option adds 18. Under reverse charge the bill shows 100 and the registered customer pays the 5 itself.

From 1 November 2026 the GTA definition drops the e-commerce local delivery carve-out added in September 2025, and Notification 07/2026 says the exemption for GTA services to unregistered persons does not cover goods supplied through an e-commerce operator.

Which goods transport is exempt from GST?

Road transport of goods by someone who is not a GTA or courier agency is exempt, and so is a GTA’s transport of certain essential goods, under Notification 12/2017-Central Tax (Rate).

• Serial 18: transport of goods by road, except by a GTA or a courier agency, and by inland waterways.
• Serial 21: GTA transport, in a goods carriage, of agricultural produce; milk, salt and food grain including flour, pulses and rice; organic manure; registered newspapers or magazines; relief materials for disaster victims; and defence or military equipment.
• Serial 21A: GTA services to an unregistered person who is not a factory, society, co-operative, body corporate, partnership firm or casual taxable person, such as a family sending its own goods.
• Serial 21B: GTA services to government bodies registered only to deduct tax at source.
• Serial 22(b): giving a means of transporting goods on hire to a GTA, such as a truck owner hiring out a vehicle to a transporter.

Older articles still quote small-consignment exemptions (freight up to one thousand five hundred rupees per carriage, or seven hundred and fifty rupees per consignee). Notification 04/2022 omitted both from 18 July 2022.

How much GST is charged on bus tickets and bus hire?

A ticket on a non-AC stage carriage, the ordinary route bus, is exempt. A ticket on an AC stage carriage or AC contract carriage is taxed at 5% without ITC. A bus hired with driver and fuel for a tour, wedding or staff trip is taxed at 5% with limited ITC or 18%.

“Stage carriage” and “contract carriage” take their meanings from the Motor Vehicles Act, 1988. Which entry fits a particular hire depends on the contract, so the operator’s CA should confirm it.

On bus hire for employees, section 17(5) of the CGST Act blocks ITC on hiring motor vehicles seating up to thirteen people including the driver, unless used for passenger transport as a business or the employer must provide transport under a law. A full-size bus is outside that clause.

GST on cab, taxi and rent-a-cab services

A radio taxi charges 5% without ITC. A cab or other passenger vehicle hired with fuel, whether billed as a ride or as rent-a-cab, charges 5% with limited ITC or 18% with full ITC. Metered cabs, auto rickshaws and e-rickshaws are exempt.

• Radio taxi: a taxi in two-way radio contact with a central control office and tracked by GPS or GPRS.
• 5% option: under Notification 31/2017, credit only on input services in the same line of business, such as a cab hired from another operator.
• 18% option: full ITC on fuel, repairs and other inputs.
• Electric cabs: from 1 November 2026, separate entries at the same 5% or 18% where battery charging is included.

Rent-a-cab has its own reverse charge. Under serial 15 of Notification 13/2017, as substituted by Notification 29/2019, when a person other than a body corporate rents a passenger vehicle with fuel to a body corporate and does not invoice central tax at 6%, the body corporate pays the GST itself. Notification 08/2026 changes that 6% to 9%, matching the 18% option, from 1 November 2026.

For a business hiring cabs for staff, section 17(5) blocks ITC on renting cars that seat up to thirteen people, with the same exceptions as for buses. Buying a car outright is a different question, covered in GST on cars in India.

Who pays GST when you book a cab or bus through an app?

The e-commerce operator pays it. Under section 9(5) of the CGST Act and clause (i) of Notification 17/2017-Central Tax (Rate), the operator pays the tax on passenger transport by radio taxi, motorcab, maxicab, motor cycle, omnibus or any other motor vehicle booked through its platform.

The original Notification 17/2017 covered radio taxis, motorcabs, maxicabs and motor cycles; Notification 17/2021 added omnibuses and any other motor vehicle from 1 January 2022, bringing app-booked bus tickets in. An exempt ride stays exempt whoever books it.

Deliveries follow the same route. Since 22 September 2025, local delivery through an operator by a person not liable to register falls under section 9(5); from 1 November 2026, Notification 09/2026 widens this to delivery services other than postal and courier.

Is GST charged on school bus transport?

Transport of students, faculty and staff supplied to a school, from pre-school up to higher secondary, is exempt under serial 66(b)(i) of Notification 12/2017. Hiring a vehicle to the operator who runs that transport for the school is also exempt, under serial 22(c).

Serial 22(c) was added by Notification 2/2018. The proviso to serial 66 limits the transport exemption to schools; the same service supplied to a college or university is not covered. How a school’s own transport fee is treated is explained in our guide to GST on education and school fees.

How DVM Techno Can Help

DVM Techno is a software company in Sector 84, Gurgaon, with a branch in Kasni, Jhajjar. Our transport management software prints LRs with e-way bill details, keeps trip sheets with diesel, toll and driver advances, and raises freight bills with party ledgers ready to export to Tally. For schools, SchoolTrack turns the driver’s phone into the tracker, with live bus location and pickup, drop and delay alerts for parents. Your GST treatment stays with your CA.

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