Cancelling Confirmed Train Ticket? Here’s How Much GST (Tax) You Have to Pay


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All you need to know about GST on cancellation of confirmed railway ticket

Indian Railways caters to the travel needs of many people around the year. During the festive season, the demand for train tickets increases significantly.

People often book tickets well in advance to secure a confirmed seat. However, many are forced to cancel their tickets due to a change in plan or some last-minute emergencies.

Indian Railways charges a cancellation fee when one cancels confirmed tickets. The cancellation of a confirmed train ticket will be costlier as it would attract Goods and Services Tax (GST).

According to a circular issued by the Finance Ministry’s Tax Research Unit on August 3, cancellation of train tickets or hotel bookings will now attract GST.

The circular explains that booking a train ticket is a contract in which the service provider promises to offer a service.

When the contract is breached by the passenger, by the cancellation of a train ticket, the service provider is compensated with a small amount, collected as a cancellation charge.

Since the cancellation charge is a payment instead of a breach of contract, it will attract GST, according to the Finance Ministry circular.

Cancellation charges of railway tickets for a class would attract GST at the same rate as applicable to the class of travel.

For example, 5 per cent GST is levied on first-class or air-conditioned coach tickets, so GST at the same rate will be applied to cancellation charges.

Indian Railways charges Rs 240 for cancellation of an AC first class or AC executive class ticket 48 hours before the departure of the train.

While booking these tickets, passengers pay 5 per cent GST.

According to the Finance Ministry’s new circular, passengers will also have to pay the same amount of GST on cancellation charges. So, in case of cancellation of a confirmed AC first class ticket, a passenger must pay Rs 12 more (5 per cent of Rs 240) towards GST.

Railway charges Rs 200 as a cancellation fee for confirmed AC 2-tier tickets and Rs 180 for AC 3-tier tickets when they are cancelled 48 hours before the departure of the train.

If the confirmed ticket is cancelled before 48 hours to 12 hours from the scheduled departure of the train, 25 per cent of the ticket amount is charged as a cancellation fee.

For cancellation of confirmed tickets between 12 hours and 4 hours, 50 per cent of the booking amount is charged.

Cancellation of a ticket in any such situation would now attract GST at 5 per cent on the cancellation charges. However, there will be no GST on cancelling second-class sleeper tickets.

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