GST to be levied on cancellation of confirmed train ticket: Finance ministry

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Cancellation of confirmed train tickets, too, will now attract GST, on cancellation charges for that particular class of travel, according to a circular issued by the Ministry of Finance on August 3.

Why GST on cancellation?

The circular – issued by the ministry’s Tax Research Unit (TRU), – explains that booking of tickets is a ‘contract’, under which the service provider (IRCTC/Indian Railways) promises to provide services to the customer.

“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,” the notification said.

For cancelling bookings of a particular class, the GST rate will be the same as that applicable while booking seats/berths for that class, it added. For example, the rate is 5% for first-class or AC coaches, while cancellation fee for this category is ₹240 (per passenger). Therefore, the total cancellation cost will be ₹252 ( ₹12 tax+ ₹240) for first-class/AC compartments. However, there is no GST on other categories, including second sleeper class.

The full circular is available here.

Conditions for booking cancellation

However, the aforementioned ₹240 cancellation charge is applicable when the ticket is cancelled 48 hours or more before the scheduled departure of the train. You can read more details by clicking on this link.

Source: Hindustan Times

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