What You Need to Know About GST on Confirmed Train Ticket Cancellations

According to a notification from the finance ministry, the cancellation fee would be subject to GST because it is a payment and not a breach of contract.

The cancellation of tickets for confirmed trains will now be subject to the goods and services tax (GST), despite the fact that the finance ministry has already made an announcement to that effect. An announcement from the finance ministry's tax research section states that the cancellation fee for a first-class or AC bus ticket would now be subject to the applicable GST rate of 5%.

The notification released on August 3 states that purchasing tickets constitutes a "contract" whereby the service provider (IRCTC/Indian Railways) agrees to supply services to the consumer. "The service provider is reimbursed with a little sum, collected as a cancellation fee, when the passenger breaches the contract. Given that the cancellation fee is a payment and not a violation of contract, it will attract GST," the notification said.

The same rule will apply if you need to cancel your hotel or flight reservations; in these cases, the cancellation fees will be taxed at the same GST rate as the main service.
The cancellation's GST rate will also depend on that specific class. According to the notification, it will be the same as that which is applicable when booking seats or berths for that class.

For instance, if the cancellation fee for first-class or AC coaches is Rs 240 per ticket and the GST rate for these classes is 5%. For first-class/AC compartments, the total cancellation fee will be Rs 252 (Rs 240 + Rs 12 tax). The second sleeper class is one of the categories that does not have GST, though.

When a ticket is cancelled 48 hours or more before to the scheduled departure of the train, Indian Railways assesses a fee of Rs 240. 25% of the ticket price is levied as a cancellation fee if the confirmed ticket is cancelled between 48 to 12 hours of the train's scheduled departure.

The interim reports on the adjustment of duty inversion and exemption were recently accepted by the 47th GST Council meeting at June's end. With effect from July 18, pre-packaged and pre-labelled retail packs of curd, lassi, and buttermilk are now subject to GST.

The Council also resolved to bring hotel rooms under Rs 1,000 per day under the 12 per cent GST slab as opposed to the current tax exemption category, and impose a GST of 18 per cent on the fees made by banks for the issue of cheques (loose or in book form).

Hospital room rent that exceeds Rs 5,000 per day per patient, except ICU, would also be taxed at 5% without an input tax credit. The Council also resolved to impose a 12 percent GST on all atlases, wall maps, topographical plans, globes, and hydrographic or similar charts.