Are you one of those who make their bookings early to secure a confirmed seat but later cancel the tickets because of change in plans? Well, the Indian Railways has now changed the rule for ticket cancellation. So if you are planning to cancel your AC or First class train ticket, then think twice! As per a circular issued by the Finance Ministry’s Tax Research unit, the cancellation charge for a first-class or AC coach ticket will now attract 5 per cent GST, which is the rate levied on the ticket. Read on to know more about the Finance Ministry and Indian Railways retaining GST amount on confirmed ticket cancellation.
GST On AC Or First Class Ticket Cancellation, Reveals The Circular Issued By The Tax Research Unit
The circular issued by the Finance Ministry’s Tax Research Unit reveals that the booking of tickets is a contract under which the service provider IRCTC/Indian Railways, promises to provide services to the passengers.
“When the contract is breached by the passenger, the service provider is compensated with a small amount, collected as a cancellation charge. Since the cancellation charge is a payment, and not breach of contract, it will attract GST,” read the circular.
Apart from this, a tweet by ANI news on August 29 read, “cancellation/clerkage charge applicable as per Refund rule & GST amount on cancellation/clerkage charge is retained by Railways. This is applicable only in AC & 1st class. GST is collected on behalf of the Finance Ministry. No change in rules/provision: Railways Ministry.”
However, cancellation/clerkage charge applicable as per Refund rule & GST amount on cancellation/clerkage charge is retained by Railways. This is applicable only in AC & 1st class. GST is collected on behalf of the Finance Ministry. No change in rules/provision: Railways Ministry
— ANI (@ANI) August 29, 2022
More Details From The Circular
The Ministry’s circular further explained that for canceling bookings of a particular class, the GST rate will be the same as that applicable while booking seats/berths for that class. For example, the rate for first-class or AC coaches is 5% and the cancellation fee is ₹240 per passenger. Hence, the total cancellation cost will be ₹252 which includes ₹12 tax+ ₹240 for first class or AC coaches. The circular also informed that there is no GST on second sleeper class or on any other categories.
As for Indian Railways, ₹240 is charged for the cancellation of a ticket 48 hours or more before the scheduled departure of the train. If the confirmed ticket is canceled before 48 hours to 12 hours from the scheduled departure of the train, 25 percent of the ticket amount is charged as a cancellation fee.
According to a notification issued by the finance ministry’s tax research unit, the cancellation charge for a first-class or AC coach ticket will now attract 5 per cent GST, which is the rate levied on the ticket. #train #gst #GST
— Hrithik jaju (@hrithikjaju) August 30, 2022
Also read: Indian Railways To Run 6 Special Trains Between Mumbai & Mangalore For Ganesh Chaturthi