According to a circular issued by the Tax Research Unit of the Finance Ministry on August 3, GST will be charged for cancellation of tickets and booking of hotels.
As the festive season is about to begin, Indian Railways is going to run many special trains for the convenience of the passengers, so that passengers do not face any problem in traveling with a confirmed ticket. However, if you cancel a confirmed ticket, the Indian Railways will charge you a cancellation charge. In addition, the railways also levy some taxes.
According to a circular issued by the Tax Research Unit of the Finance Ministry on August 3, GST will be charged for cancellation of tickets and booking of hotels. Giving details, the circular states that booking a train ticket is a contract in which the service provider undertakes to provide the service. On the other hand, when the rules are not followed on the part of the passenger, then by canceling the train ticket, the Railways has to pay compensation along with the cancellation fee.
The circular states that the cancellation fee is a payment, so it will attract GST. The circular also states that GST will be applicable at the same rate as applicable to the category of travel. For example, 5 per cent GST is levied on first class or AC coach tickets, hence GST at the same rate will be applicable on cancellation charges.
Indian Railways charges Rs 240 for cancellation of AC first class or AC working class ticket 48 hours before the departure of the train. Passengers pay 5% GST at the time of booking these tickets.
According to the new circular of the Finance Ministry, passengers will also have to pay the same amount of GST on cancellation charges. Therefore, in case of cancellation of a confirmed AC first class ticket, a passenger will have to pay Rs 12 more (5 per cent of Rs 240) towards GST.
Railways charges Rs 200 for a confirmed AC 2-Tier ticket and Rs 180 for an AC 3-Tier ticket if it is canceled 48 hours before the departure of the train. If the confirmed ticket is canceled 48 hours to 12 hours before the scheduled departure of the train, 25% of the ticket amount is charged as cancellation fee.
For cancellation of confirmed tickets between 12 hours to 4 hours, 50% of the booking amount is charged. At the same time, in any such situation, 5 percent GST will be levied on the fee for cancellation of the ticket. However, cancellation of second class sleeper ticket will not attract GST.
