Implications of GST on Bus Tickets

Goods and Services Tax or GST is even applicable to transportation. This implies that the tax is levied on all modes of transfer, be it flights, trains, or road transfers. In this article, we will specifically explore the GST on bus tickets to understand its far-reaching effects on businesses and their employees travelling for work:

 

Efficient transportation is a marker of the growth for any economy. It, therefore, has an extensive impact on the development of a nation. It further ensures a seamless cycle of supply and demand while spearheading the economy’s industrialisation and rapid development. Hence, the government levies GST on a wide range of products, including the different modes of transportation. This GST rate varies from 0 to 18%. 

However, even though the government charges GST on transportation, it marginally affects the prices and simultaneously generates revenue for the country’s administration.

So, is there GST on Bus tickets? Yes, the same is applicable for the GST rate on transport of passengers by bus. However, the tax rate on bus tickets can differ on the basis of:

• The type of bus
• The distance travelled

Let us discuss everything one needs to know about GST on Bus transfers for an extensive understanding:

Significant Modes of Transportation in India:

There are four primary means of transportation in the country, namely:

What is GST?

The Goods and Services Tax (GST) is the comprehensive indirect tax that has replaced the many indirect taxes imposed before like:

• Central Sales Tax
• State Value Added Tax (VAT)
• Service Tax

Introduced in India on July 1, 2017, the GST regime is destination based. This implies that the tax is levied and paid for in the state where the goods and services are consumed. Hence, GST is charged on the value of the goods and services at the point of sale.

How Does GST Rate on Bus Tickets Work?

The GST on transportation of passengers by bus varies depending upon two major factors, including the bus type and the distance travelled. Currently, travellers are expected to pay the following GST on bus services:

 

Bus Type	GST Rate
Air Conditioned (AC) Bus	5 %

 

Additionally, the GST on AC bus tickets can either be 5% with restricted ITC (Input Tax Credit), or 12% in the event that full ITC is claimed.

What are the Different Types of GST Applicable to Bus Tickets?

The GST rates applicable on bus tickets are of two types:

• Central GST or CGST: The central GST is levied by the central government and is currently charged at 2.5%.
• State GST or SGST: The state government charges 2.5% as bus ticket GST, also known as SGST.

How is GST on Bus Services Calculated? 

With the imposition of the new GST regime, a significant impact was observed on the Bus ticket industry. Due to an increase in the bus ticket GST rates, there has been an increase in the cost of bus journeys. 

However, on the contrary, applying Goods and Services Tax has made travel through buses more transparent because the tax is now included in the ticket price itself.

The tax is currently calculated on the value of the ticket bought. This value includes several charges like:

• The travel fare.
• Additional charges like service tax and fuel surcharge.

There are implications of GST for both the passengers as well as the bus operators. The GST on travel through bus is added to the value of the ticket. While the passenger is responsible for paying the GST rate on the ticket, the bus operator is responsible for collecting this GST from the passengers and remitting it to the government. On the one hand, where GST has increased the operator’s costs, it has also made it easier for them to claim ITC or Input Tax Credit on the GST paid for providing bus operating services.

Claiming ITC for GST on Bus:

There are often several questions concerning ITC for GST like-

• Can ITC be availed for GST?
• When is a supplier supposed to charge GST on an invoice?
• Can ITC be claimed on such invoices?

To answer these questions, let us understand some of the primary concepts concerning GST:

• Under the GST regime, the seller is supposed to collect the tax from the buyers and then remit it to the government after deducting the tax amount from their own purchases. 
• This is also known as a forward charge and is subject to several other provisions. 
• In most cases, bus transportation charges include 5% GST. 
• However, if you are not renting the complete vehicle (with more than 13 seats), in that case, ITC is not applicable. 
• Hence, it is important for companies tracking the corporate travel expenses within their organisation to know that GST on bus hire for employees is imposed only on individual travel and not bus rentals exceeding more than 13 seats.

 

Why Choose myBiz for GST Transportation of Employees:

Companies with employees travelling far and wide for its growth and development need a seamless and convenient travel management solution. Partnering with such a platform takes care of every aspect of their business travel. 

From hotels, flights to bus ticket bookings, at myBiz, we ensure business travellers receive GST invoices for buses, thanks to an inventory powered by redBus. Our premium buses offer ease and comfort, contributing to enhanced employee productivity, helping your business grow. Our AI-powered platform further enables effortless business travel management by providing hassle-free travel reporting and tagging. 

So, make the most of myBiz's consolidated business trip management!

Frequently Asked Questions (FAQs) About GST on Bus Transportation 

 

Q1. What is GST rate on transportation?

Ans. The GST rate on transportation through taxis and buses is 5% under the current regime.

Q2. What is the GST rate for bus rental?

Ans. The applicable rental GST rate on bus tickets for availing transport of passengers in an air-conditioned contract carriage like buses is 18%. However, the GST rate will be 5% with no ITC.

Q3. Who will pay GST on transportation?

Ans. Any GST-registered company, corporate, factory, cooperative society, partnership firm, as well as a taxable individual is liable to pay GST on bus tickets and other transportation services.

Q4. What is the GST rate for passenger transport by bus?

Ans. A GST rate of 5% shall be applicable on bookings with limited ITC, or it can be 12% in the event of a full ITC claim.

Related Blogs:

• •  All you know about GST on travel
• •  GST on Hotel Rooms: Everything You Need To Know!
• •  Everything About GST on Flight Tickets and Input Tax Credit
• •  GST Bill In India: A Complete Guide For Business Travellers!
• •  GST Registration: A Step by Step Guide For Small Businesses
• •  GST on International Flight Tickets and Input Tax Credit: A Complete Guide!