September 06, 2025: The recent GST Council decision to cut tax rates on key logistics inputs is set to reduce costs across India’s transport and supply chain ecosystem. Effective September 22, 2025, these reforms touch three critical areas—insurance, vehicles, and tyres—directly impacting the operating expenses of goods transporters and fleet operators.
· Insurance for Goods Vehicles
The GST on third-party insurance for goods carriages has been reduced from 12% to 5% (PIB). Since this insurance is mandatory for all commercial vehicles, the move will immediately lower the recurring cost burden on Goods Transport Agencies (GTAs). For truck operators, where margins are already thin, this translates into direct savings and improved cash flow and same shall help in reduction for overall logistic cost for the end user.
· Commercial Trucks and Buses
Heavy commercial vehicles such as trucks, buses, and ambulances will now attract 18% GST, down from 28% . Given that trucks carry nearly 65–70% of India’s freight, the reduction lowers the upfront cost of purchasing new vehicles. This policy intervention will not only support fleet modernization but also help reduce freight rates, creating a positive ripple effect for farmers, manufacturers, e-commerce players, and end consumers.
· Tyres and Road Safety
Tyres across all categories—ranging from two-wheelers to heavy trucks—will now attract 18% GST instead of 28%. Industry associations note that lower tyre costs will encourage timely replacement, reducing the risk of accidents due to worn-out tyres. This will improve road safety while lowering long-term vehicle maintenance expenses, making the transport sector more efficient and reliable.
Industry Perspective
Isa Logistics views these GST reforms as proactive measures that strengthen the competitiveness of Indian logistics while supporting the government’s vision of Viksit Bharat 2047.
Ankit Jain, CFO, ISA Logistics, commented:
“We applaud the government’s decision to lower GST rates on key logistics inputs. Cutting the tax on goods-vehicle insurance from 12% to 5% will immediately reduce mandatory insurance costs for every truck operator. Likewise, bringing trucks, buses, and related vehicles down to 18% GST significantly eases the financial burden on fleet owners. The reduction in tyre GST to 18% is also a boon – it makes maintenance cheaper and will encourage timely tyre replacement, improving safety and efficiency. These measures will free up cash flow for transporters and allow logistics companies like ours to pass significant benefits of cost savings supporting the intent of govt passing the benefits to the end user. In sum, the rate cuts align perfectly with the Viksit Bharat 2047 goal of lowering supply-chain logistics costs and stimulating growth in the agriculture, manufacturing, and e-commerce sectors.”
Key Takeaways
· Insurance relief: Third-party insurance on goods vehicles reduced from 12% → 5%
· Fleet costs down: Trucks, buses, and ambulances lowered from 28% → 18%
· Tyres more affordable: All tyres reduced from 28% → 18%
· Effective date: September 22, 2025
Together, these cuts are expected to lower logistics costs, improve road safety, and boost India’s supply-chain competitiveness. By making transportation more affordable, the reforms provide much-needed relief to transport operators, small traders, and consumers alike.