Rail ticket cancellation for AC, 1st Class coaches to attract 5% GST

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As per the latest notification, you have to pay more for canceling the confirmed rail tickets for AC and first class. Following a circular from the Ministry of Finance on August 3, cancellation fees for confirmed railway tickets would also be subject to GST. Let us understand the concept of Rail ticket cancellation for AC, 1st Class coaches to attract 5% GST.

Announcement by Ministry of Finance for GST on Rail Ticket Cancellation 

It has been announced by the finance ministry that goods and services tax (GST) would be applied on the cancellation of confirmed railway tickets. The finance ministry’s tax research division has announced that the GST rate that is applied to the ticket itself—5%—will also be applied to the cancellation fee for first-class or air-conditioned train tickets.

Why will there be GST on Railway Ticket Cancellation?

In accordance with the announcement made on August 3, ticket purchases constitute a “contract” in which the service provider (IRCTC/Indian Railways) makes an obligation to fulfill certain service requirements. When a passenger cancels their reservation, the service provider is paid a nominal cancellation fee. There will be GST applied to the cancellation fee because it is a payment and not a penalty for breaking the contract, the announcement explained.

Know more at: GST on Transport

Will you have to pay GST on Air Tickets or Accomodation Cancellation?

Yes, you will have to pay GST on Air Tickets or Accomodation Cancellations. Cancellation fees for air travel and hotel stays will follow the same concept and be subject to GST at the same rate as the GST applied on the primary service.

In addition, the GST rate applicable to the refund is category-specific. According to the announcement, it will be the same rate as what is used when reserving seats or berths in the same class.

Other important reforms announced for GST Rates 

As per the GST 47th Council Meeting, As of July 18, prepackaged and prelabeled retail packets, including curd, lassi, and buttermilk, became subject to the Goods and Services Tax. Banks’ fees for issuing cheques (loose or in books) will now be subject to 18 percent GST, while hotel rooms costing less than Rs 1,000 per day would fall under the 12 percent GST slab, rather than the present 0 percent. Furthermore, there would be a 5% tax, with no input tax credit allowed, on the portion of hospital room rent above Rs 5,000 per day per patient that is not spent in the intensive care unit (ICU). The Council further resolved to levy a 12 percent GST on all types of maps and hydrographic or comparable charts, such as atlases, wall maps, topographical plans, and globes.

If you wish to know more about GST,  GST Registration and GST Return Filing, you can contact us at: 8881-069-069 or info@e-startupindia.com.

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Procedure for cancellation of GST registration by tax officer

moreover, If you want any other guidance relating to GST Return Filing or GST Registration, please feel free to talk to our business advisors at 8881-069-069.

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