GST on Freight Pass-Through Payments for Logistics Aggregators
Logistics aggregators do not pay GST on freight money they collect from shippers and pass directly to carriers.
- Ruling
- Advance Ruling No. 49/ARA/2025, dated 17.11.2025
- Dated
- 17 Nov 2025
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- The company asked if freight deposits held in escrow are taxable.
- The authority ruled these deposits are not a supply of services.
- Only the company's commission or subscription fee is subject to GST.
In short
The company asked the Tamil Nadu Authority for Advance Ruling (AAR) if they must pay Goods and Services Tax (GST) on freight money they collect from shippers to pay carriers. Because the company acts only as a middleman and passes the full amount to the carrier without keeping any of it, the authority decided this money is not part of the company's taxable income.
What has changed
How it worked before
It was unclear if logistics platforms acting as payment conduits for freight were liable for GST on the total amount flowing through their accounts.
What has changed
The authority confirmed that freight money held in escrow is not 'consideration' for the company's services. In practice, this means you only pay GST on the commission or service fee you earn, not on the total freight amount you pass on to the transporter.
Who this affects
Online logistics aggregators and freight booking platforms that collect and forward payments between shippers and carriers.
An example
Imagine a logistics platform, 'MoveFast', that connects shippers to truck drivers. A shipper pays 10,000 rupees for freight and 500 rupees as a platform fee to MoveFast. MoveFast sends the full 10,000 rupees to the driver. Under this ruling, MoveFast only pays GST on the 500 rupees, not the 10,000 rupees.
What you should do
If you operate a similar platform, ensure your contracts clearly separate your service fee from the freight charges. Remember that an advance ruling only binds the company that asked and its specific tax office; it is not a law that automatically applies to your business.
If you do nothing
If you assume this ruling applies to you and stop paying GST on your total turnover, a tax officer may disagree with your interpretation. You could face demands for unpaid tax, interest, and penalties if the officer decides your business model does not match the specific facts of this case.
The terms explained
- Consideration
- The payment or value received in exchange for providing a service or good.
- Escrow account
- A temporary account where money is held by a third party until it is transferred to the final recipient.
- Supply
- Any form of business activity, such as a sale or service, that is subject to GST.
The ruling in detail
Authority for Advance Ruling
M/s. B2B Trucks (P) Ltd.
Advance Ruling No. 49/ARA/2025, dated 17.11.2025 · Tamil Nadu
Questions before the authority
- Requesting for GST exemption in respect of an escrow deposit account to be opened and operated by them solely to facilitate forwarding of freight amounts as deposited by shippers to the accounts of carriers without any deduction.
Facts
The applicant operates an online portal connecting shippers and carriers across India without undertaking responsibility for the physical movement of goods. Shippers deposit freight amounts into the applicant's account, which are then forwarded in full to the carriers upon delivery. The applicant acts as a facilitator and receives a separate commission or subscription fee for this service, on which they pay GST.
Ruling
| Question | What the authority ruled |
|---|---|
| GST liability on freight amounts deposited in applicant's account | Not liable to pay GST The amount is held solely for forwarding to carriers without deduction |
The authority ruled that the applicant is not liable to pay GST on the balance amount of freight deposited by shippers into their account. This amount is held by the applicant solely for the purpose of forwarding it to the carriers without any deduction. Consequently, this transaction does not constitute a supply of goods or services by the applicant.
Reasoning
The authority determined that the freight amount does not constitute 'consideration' for the applicant as defined under Section 2(31) of the CGST Act, 2017, because it is not a payment for a supply made by the applicant. Furthermore, the applicant does not qualify as a 'pure agent' under Rule 33 of the CGST Rules, 2017, as they do not incur expenditure on behalf of the recipient. Since the applicant is merely a facilitator and the freight amount does not belong to them, the transaction does not meet the criteria for a 'supply' under Section 7 of the CGST Act, 2017. Therefore, the **deposit amount is not taxable** in the hands of the applicant.
Provisions relied on
- Section 2(31) of the CGST Act, 2017
- Section 7 of the CGST Act, 2017
- Rule 33 of the CGST Rules, 2017
For the practitioner
This ruling provides clarity for online logistics aggregators that act as pure conduits for freight payments. It confirms that **pass-through freight amounts** held in a current or escrow account are not subject to GST in the hands of the facilitator, provided they do not retain any portion of the freight as consideration. Practitioners should ensure that the service fee or commission is clearly separated and taxed appropriately to maintain this distinction.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/5-ms-b2b_trucks_pvt_ltd.pdf
Legibility of the scan, as read: high.
Prepared 15-10-2026.
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