Rail Passengers Will Now Pay GST On Cancelled Tickets: Cancellation Becomes More Expensive (How Much?)

While booking train tickets on the Indian Railway Catering and Tourism Corporation (IRCTC) platform, a GST is charged upon the booking. 

According to a circular issued by the finance ministry earlier this month, a GST will now be applied on canceling a confirmed train ticket too.

As per the circular, the Ministry of Finance has explained the rationale for charging tax on canceling a booked ticket that states the booking of ticket being a ‘contract’, under which the Indian Railways commits to provide services to the train customers.

“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,” stated the ministry’s notification.

The rate of GST charged on canceling booked tickets will be the same as that applicable on booking the tickets for that class, which means that they will be the same as the booking rates for that particular class.

This means that cancelling a confirm first class or AC coach ticket will charge the passenger a 5% GST on the booking. The same will be the case for cancellation of any air travel or hotel accommodation booked on the IRCTC platform.

The Ministry sees cancelling a booking as a payment rather than a breach of contract, which means that it would attract a GST.

Similarly, the payment received by Indian Railways in the form of liquidated damages against tolerating non-performance of conditions of a contract such as a delay in the rendering of supply is not liable to GST, stated the circular.

“If a confirmed ticket is cancelled more than 48 hrs before the scheduled departure of the train, flat cancellation charges shall be deducted @ Rs.240/- for AC First Class/Executive Class, Rs.200/- for AC 2 Tier/First Class, Rs. 180 for AC 3 Tier/AC Chair car/ AC 3 Economy, Rs.120/- for Sleeper Class and Rs.60/- for Second Class. Cancellation charges are per passenger. 

If a confirmed ticket is cancelled within 48 hrs and up to 12 hours before the scheduled departure of the train, cancellation charges shall be 25% of the fare subject to the minimum flat rate mentioned in the above clause. 

Less than 12 hours and upto four hours before the scheduled departure of the train up to chart preparation which is earlier, 50% of the fare paid subject to the minimum cancellation charges,” stated IRCTC’s website.