Indian Railways: GST Applicable on Cancelling AC Class Confirmed Tickets

The Indian Railways clarified the rules governing cancellation and refund of tickets and said there had been no change in such provisions. The Railway Ministry said that once a ticket is cancelled, the fare amount and the Goods and Services Tax (GST) charged at the time of booking would be fully refunded to the passenger.

The ministry cited information as per previous instructions issued in September 2017. Also, the ministry explained that the cancellation charges and GST applicable on cancellation charges would be retained by the railways.

Further, the ministry said GST is applicable only in the case of AC and first-class tickets, and railways are collecting GST on behalf of the Finance Ministry. The Finance Ministry issued guidelines on implementing GST on cancellation charges of confirmed train tickets on 3rd August 2022.

Railway’s Tax Research Unit (TRU) explained in the circular that the booking of tickets is a ‘contract’ under which the service provider (Indian Railways) promises to provide services to the customer. The circular clarified that the GST rate on cancellation charges of railway tickets for a class would be the same as applicable to the class.

For instance, the rate is 5% GST is applicable on first-class or AC train tickets, and the cancellation fee for this category is Rs 240 per passenger. Therefore, the total cancellation charges will reach Rs 252 ( Rs 12 tax on Rs 240). However, there is no GST on other categories, including the second sleeper class.

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