GST on Warehousing & 3PL Services: Rates, RCM on GTA, and Input Tax Credit

TABLE OF CONTENT:

GST (Goods & Services Tax) rates and SAC codes for warehousing and logistics

Every service carries a six-digit Services Accounting Code (SAC), and your 3PL or transporter should print it on the invoice. These are the codes and rates that matter for a supply chain:

What GST 2.0 (22 September 2025) changed for logistics

The 56th GST Council meeting on 3 September 2025 cut the regime down to two main slabs, 5% and 18%, plus a 40% demerit rate. The new rates took effect on 22 September 2025. For warehousing and 3PL buyers, the main changes were:

Most shippers will see no change on their monthly invoices. Things change mainly if your transporter was on the old 12% option: that transporter now bills at 18%. If you can claim ITC, the tax still nets out, but your working capital takes a bigger hit until the credit comes through.

How a 3PL "bundle" is taxed: composite supply

A typical fulfillment invoice combines inbound handling, storage, pick-pack, packaging material, labelling and sometimes last-mile shipping. Under Section 2(30) of the CGST Act, a composite supply is two or more supplies that are naturally bundled, and the whole bundle is taxed at the rate of its principal supply (Section 8(a)).

Worked example 1: A D2C brand's monthly 3PL invoice (intra-state, Maharashtra)

GST charged is ₹41,400, and all of it is available as ITC. That works out to an effective cost of ₹28.75 per order (₹2,30,000 ÷ 8,000) before tax. If you are a composition dealer or make exempt supplies, the ₹41,400 becomes a real cost, and the per-order figure rises to ₹33.93.

GTA services: choosing between 5% and 18%

A Goods Transport Agency is any person who provides road transport of goods and issues a consignment note (lorry receipt / bilty), whatever it calls the document. GTAs have two options:

Which option makes sense for a transporter depends on its cost base. Diesel sits outside GST, so a transporter's biggest single cost carries no credit on either option. Only tyres, spares, repairs, insurance, software and new trucks generate ITC.

Worked example 2: A GTA with ₹10 lakh monthly freight revenue

Assumptions: diesel ₹5,00,000 (no GST) and other inputs carrying ₹60,000 of GST.

On the 18% option, the GTA saves ₹60,000 a month in blocked credit and can pass part of that saving to clients through lower base freight. The trade-off is that clients who can't claim ITC, such as agri traders, composition dealers and unregistered buyers, pay 13 percentage points more tax. Fleet-heavy GTAs that mainly serve registered B2B clients usually do better on 18%.

Reverse charge (RCM) on GTA: who pays, and how

Under Notification 13/2017-CT(R), Entry 1, if the GTA has not opted for forward charge, the recipient pays 5% GST when it is any of the following:

When GTA services are fully exempt

Under Entry 21 of Notification 12/2017-CT(R), no GST applies (forward or reverse) to road transport of:

• Agricultural produce;
• Goods where freight for a single carriage is ≤ ₹1,500;
• Goods for a single consignee where freight is ≤ ₹750;
• Milk, salt, food grains (including flour, pulses and rice);
• Organic manure;
• Registered newspapers and magazines;
• Relief materials for disaster victims;
• Defence or military equipment.

GTA services to an unregistered individual who doesn't fall in any category above are also exempt.

How to discharge RCM correctly

RCM on warehouse rent from unregistered landlords

Many warehouses in godown clusters such as Bhiwandi, Taloja, Chakan and Hoskote belong to individual landowners who aren't registered under GST. From 10 October 2024 (Notification 09/2024-CT(R)), when an unregistered person rents out any property other than a residential dwelling to a registered person, the tenant pays 18% GST under RCM.

Worked example 4: A 25,000 sq ft warehouse in Bhiwandi at ₹22/sq ft

Because the landlord is unregistered, you also need to raise a self-invoice (Section 31(3)(f)). Issue it within 30 days of receiving the service, and generate a payment voucher. Put this into your rent-payment SOP, because auditors flag it often.

This is one reason brands move from self-leased godowns to a managed 3PL warehouse: the operator carries the lease, and you get one forward-charge 18% invoice with no RCM paperwork.

Input tax credit: conditions you must meet

Under Section 16 of the CGST Act, you can claim ITC on warehousing, 3PL and freight only if all of the following hold:

• You hold a valid tax invoice (or a debit note / self-invoice for RCM).
• The invoice appears in your GSTR-2B (Section 16(2)(aa), in force since 1 January 2022). If the 3PL doesn't file GSTR-1 on time, you can't claim the credit.
• You have received the service. For storage, this happens month by month.
• The supplier has paid the tax to the government.
• You have filed your GSTR-3B return.
• You pay the supplier within 180 days of the invoice date. Otherwise you must reverse the ITC with interest, and you can re-claim it once you pay (Rule 37).
• You claim within the time limit: 30 November of the following financial year, or the date you file your annual return, whichever is earlier (Section 16(4)).

Mixed use: taxable and exempt storage (Rule 42)

Cold-storage operators often store both exempt agricultural produce and taxable processed foods. Credit on common inputs, such as electricity equipment AMC, security and WMS software, must be split in proportion to turnover:

Blocked credits: what a warehouse can and cannot claim

Section 17(5)(d) blocks ITC on goods and services used to construct an immovable property on your own account, other than plant and machinery, even when the property is used for business.

In Safari Retreats (October 2024), the Supreme Court held that a building could qualify as "plant" under a functionality test. The Finance Act 2025 amended the section retrospectively from 1 July 2017, replacing "plant or machinery" with "plant and machinery". That reversed the judgment's effect, so a warehouse building that you build and lease out still doesn't earn ITC.

Special cases: bonded warehouses, FTWZ and agri storage

Customs bonded warehouses

Under Schedule III, para 8(b) of the CGST Act, when warehoused goods are sold to another person before clearance for home consumption, the sale is treated as neither a supply of goods nor a supply of services. Importers can sell goods in bond without GST, and IGST applies only at ex-bond clearance, together with customs duty. The storage service itself is still charged at 18%. See our guide on bonded warehouses.

FTWZ (Free Trade Warehousing Zones)

FTWZs are notified SEZs. Services supplied to an FTWZ unit or developer for authorised operations are zero-rated under Section 16 of the IGST Act, so the supplier can bill without tax under a LUT or claim a refund. Read FTWZ vs bonded warehouse for how the two models compare.

Agricultural produce

Entry 54(e) exempts storage of agricultural produce, meaning produce that has had no processing, or only processing that doesn't change its essential character. Cleaning, drying and grading are fine. Branded, processed or packaged foods, dairy products beyond the primary stage, and frozen ready-to-eat items are taxed at 18%. Several AARs have denied the exemption where the goods had been processed, so check each commodity. See agricultural warehousing and cold storage warehousing.

Marketplace sellers: TCS

If you sell through Amazon, Flipkart or other e-commerce operators, the marketplace collects TCS at 0.5% (0.25% CGST + 0.25% SGST, or 0.5% IGST) on net taxable sales under Section 52. The rate was cut from 1% on 10 July 2024. The amount shows up in your electronic cash ledger once you accept it on the portal. Remember to add each 3PL warehouse location to your GST registration as an Additional Place of Business.

Timeline: how the rules got here

• 1 July 2017GST launched. Warehousing at 18%; GTA at 5% under RCM or 12% under forward charge; agri storage exempt.
• 18 July 2022GTAs can opt for forward charge through an annual declaration (Annexure V). RCM on residential rent to registered persons begins.
• July 2023 (50th Council)The GTA forward-charge option now continues automatically each year, and the deadline moves to 31 March of the preceding FY.
• 1 August 2023E-invoicing is mandatory above ₹5 crore aggregate turnover. Warehousing and 3PL vendors above this threshold must issue IRN-based invoices.
• 10 July 2024E-commerce TCS cut from 1% to 0.5%.
• 10 October 2024RCM at 18% on commercial property (including warehouses) rented from unregistered persons.
• 16 January 2025Composition taxpayers excluded from RCM on commercial rent.
• Finance Act 2025Section 17(5)(d) amended retrospectively from 1 July 2017 ("plant and machinery"), reversing Safari Retreats.
• 22 September 2025 (GST 2.0)Two-slab structure. The GTA forward-charge rate rises from 12% to 18% with full ITC, and trucks move from 28% to 18%. Warehousing stays at 18%.

Compliance checklists

If you're a brand using a 3PL or warehouse

• Add every 3PL warehouse as an Additional Place of Business in your GST registration before stock arrives.
• Check that the 3PL invoice shows the correct SAC (9967xx), your GSTIN and the place of supply.
• Reconcile 3PL and transporter invoices against GSTR-2B every month, and chase suppliers who haven't filed.
• Keep a register of GTAs and whether each has opted for forward charge. Get a copy of the Annexure V acknowledgement for the FY.
• Pay RCM in cash for GTA freight and unregistered-landlord rent, and claim the ITC in the same GSTR-3B.
• Pay vendors within 180 days to avoid Rule 37 reversals.
• Reverse ITC on shrinkage, damage and write-offs, and recover the loss from the 3PL under your SLA where the 3PL was at fault.
• Generate e-way bills for stock transfers to the 3PL warehouse, including transfers within the same GSTIN across states. Inter-state branch transfers are taxable supplies.

If you own or operate a warehouse

• Keep separate records for exempt agri storage and taxable storage, and run the Rule 42/43 reversal every month.
• Capitalise civil work and plant & machinery in separate asset heads, so ITC on racking and MHE isn't lost along with the building.
• If you transport goods and issue consignment notes, decide on the 5% vs 18% GTA option by 31 March.
• If your turnover exceeds ₹5 crore, issue e-invoices, and report each one within 30 days if your turnover is ₹10 crore or more.