The two rates
The entries for transport of passengers by motor vehicle (heading 9964) and renting of a motor vehicle with operator designed to carry passengers (heading 9966) both apply where the cost of fuel is included in what you charge. That is almost every cab, tempo traveller and bus hired with a driver. For these, a registered operator charges either:
- 5% (2.5% CGST and 2.5% SGST, or 5% IGST), taking input tax credit only on services in the same line of business, such as a car hired from another operator for your customer. No credit on the car, the fuel or the servicing.
- 18% (9% CGST and 9% SGST, or 18% IGST), with full input tax credit on what you buy for the business.
Most small operators bill 5%: their customers are families and travellers who cannot claim the GST back, and fuel, the largest cost, carries no GST to claim in any case.
What changed on 22 Sep 2025
Until 21 Sep 2025 the second option was 12% with full credit. Notification 15/2025-Central Tax (Rate), issued after the 56th GST Council meeting, replaced it with 18% with full credit from 22 Sep 2025. The 5% option stayed. A bill dated on or after 22 Sep 2025 at 12% is at a rate that no longer exists for these services.
Side by side
| 5% | 18% | |
|---|---|---|
| Split in your state | CGST 2.5% + SGST 2.5% | CGST 9% + SGST 9% |
| Input tax credit | Only on services in the same line of business | Full |
| Billing a company, as a proprietor or partnership | The company pays the GST under reverse charge | You charge it on your invoice |
| Before 22 Sep 2025 | 5%, the same | 12% with full credit |
| Source | Notification 11/2017-CT(R), headings 9964 and 9966 | The same, as amended by 15/2025-CT(R) |
Billing a company: reverse charge
When an operator that is not a body corporate (a proprietor, a partnership or an HUF) rents a car or bus with driver, fuel included, to a body corporate (a private or public limited company), and bills it at 5%, the company pays the GST under reverse charge (notification 13/2017-Central Tax (Rate)). Your invoice shows the taxable value, says that tax is payable on reverse charge, and you collect no GST from the company.
If you bill the company at 18% instead, the reverse charge does not apply: you charge the GST on your invoice and pay it yourself. A private limited operator always charges the GST itself.
CGST and SGST, or IGST
For a customer who is not registered, the trip is taxed where the passenger boards, which for most trips is your own state: CGST and SGST at half the rate each. For a company registered for GST, it is taxed where the company is registered (IGST Act, section 12(9)): CGST and SGST if that is your state, IGST at the full rate if it is another. A Mumbai operator billing a company with a Gujarat GSTIN charges IGST.
Toll, parking and permit
Toll, parking and the state permit fee you pay on the way are the customer's costs that you pay for them. Billed separately at the exact amount, with the receipts kept, they are commonly treated as the expenses of a pure agent (rule 33 of the CGST Rules) and left out of the taxable value. Driver allowance, night charge, waiting and extra km are part of your service and carry GST like the fare.
A worked example
Sharma Travels, a sample operator, ran their Innova Crysta from Thane West to Shirdi and back. They bill GST at 5%, taken as inside the total, and the customer is in the same state. Toll and parking are at actuals.
| Tax invoice SHT/2627/0001 | Amount |
|---|---|
| 502 km at ₹19 a km | ₹9,538.00 |
| Driver allowance, 1 day at ₹400 | ₹400.00 |
| Toll, at actuals | ₹1,240.00 |
| Parking, at actuals | ₹100.00 |
| Waiting | ₹300.00 |
| Total | ₹11,578.00 |
| Toll and parking, outside the taxable value | ₹1,340.00 |
| Taxable value, the rest less the GST in it | ₹9,750.48 |
| CGST at 2.5% | ₹243.76 |
| SGST at 2.5% | ₹243.76 |
The taxable value is the charged amount times 100 divided by 105. The customer pays the same total either way; the invoice shows how much of it is GST.
What a cab tax invoice must show
Rule 46 of the CGST Rules lists what a tax invoice carries. For a cab trip that means:
- Your legal name, address and GSTIN.
- A serial number of up to 16 characters, unique for the financial year, and the date.
- The customer's name and address, and their GSTIN if they are registered.
- The SAC code and a description of the trip.
- The taxable value, the rate, and the CGST and SGST or IGST amounts.
- The place of supply, with the state's name, when it is another state.
- Whether tax is payable on reverse charge.
- Your signature, or your digital signature.
Our taxi bill format has every one of these lines, free to print.
Other cases
- Aggregator rides. On rides booked through an app such as Ola or Uber, the app company pays the GST (CGST Act, section 9(5)).
- Exempt transport. Some passenger transport is exempt (notification 12/2017-CT(R)), such as by metered cab or auto rickshaw. A non-AC contract carriage is exempt only when it is not hired for tourism, a conducted tour, a charter or a hire.
- Self-drive. Renting a car without a driver falls under a different entry, at the rate that applies to the car itself, so it depends on the vehicle. Ask your CA.
- Registration. Required once your own turnover crosses ₹20 lakh a year (₹10 lakh in a few special category states), and possible earlier by choice.
Sources
- Notification 11/2017-Central Tax (Rate), headings 9964 and 9966.
- Notification 15/2025-Central Tax (Rate), 17 Sep 2025, effective 22 Sep 2025.
- Notification 12/2017-Central Tax (Rate), exemptions for passenger transport.
- Notification 13/2017-Central Tax (Rate), reverse charge on renting of motor vehicles.
- IGST Act 2017, section 12(9); CGST Act 2017, sections 9(5) and 22; CGST Rules 2017, rules 33 and 46.
This describes the law as of 11 Oct 2026, from the sources named on this page. It is not tax advice. Rates change with the GST Council, so confirm with your CA before you invoice.
