GST to be levied on cancellation of confirmed train ticket

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Cancellation of confirmed train tickets, will attract GST on cancellation charges for that particular class of travel as per circular issued by CBIC on 03rd August 2022.

The GST will be calculated on cancellation charges for the class of travel under which the journey was to be undertaken. 


It has to be understood  that booking of tickets is a ‘contract’, under which the service provider (either IRCTC/Indian Railways as the case may be.....) promises to provide services to the customer.

When the contract is breached by the passenger in the case of Tickets cancellation, the service provider is compensated with a small pre-determined amount, collected as a cancellation charge. Since the cancellation charge is a payment and not breach of contract it will attract GST the circular Contends.

However, it has to be noted that for cancelling bookings of a particular class the GST rate will be the same as that applicable while booking seats/berths for that class.

For quick understanding it can be explained with an example

Let's assume that the rate is 5% for first-class or AC coaches while cancellation fee for this category is ₹240 (per passenger). 

Now, therefore, the total cancellation cost will be ₹252 ( ₹12 GST [240x5%]+ ₹240) for first-class/AC compartments. 

However, one should very clearly note that there is no GST on other categories, where the cost of transport of passengers attracts Nil GST including second sleeper class.

Well......

Now there will not be any misconceptions that GST is all pervasive.......

SRIVATSAN.R.

MEPZ -SEZ,

Chennai

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