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.
IRCTC Refund Rules 2022: Cancellation of confirmed train tickets would now become costlier as it would attract Goods and Services Tax (GST). Issuing a circular, Finance Ministry’s Tax Research Unit said that the booking of tickets is a ‘contract’, under which the service provider (IRCTC/Indian Railways) promises to provide services to the customer
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“As per instruction issued dated Sept 23, 2017, in case of cancellation of tickets, refund amount due as per Railway Cancellation of tickets and Refund of Fare Rule along with the total amount of GST charged at the time of booking is refunded in full. However, cancellation/clerkage charge applicable as per Refund rule & GST amount on cancellation/clerkage charge is retained by Railways. This is applicable only in AC & 1st class. GST is collected on behalf of the Finance Ministry. No change in rules/provision”, Ministry of Railways said.
WHY GST ON CANCELLATION?
The circular explains that booking a train ticket is a contract wherein the service provider promises to provide services to the customer. 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.
CANCCELLATION CHARGES
- 5% GST is levied on AC first or AC 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 ₹ 12 more (5 per cent of ₹ 240) towards GST.
- Railways will charge Rs 200 as a cancellation fee for confirmed AC 2 tier tickets and Rs 180 for confirmed AC 3 tier tickets (if 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.
- Passengers have to pay 50 per cent of the booking amount if they are cancelling confirmed tickets between 12 hours and 4 hours.
