IRCTC Changed Refund Rules on Cancellation of Confirmed Train Tickets

Overview

Cancellation of confirmed rail tickets will now be more expensive because it will be subject to Goods and Services Tax (GST). The Finance Ministry's Tax Research Unit stated in a circular that booking tickets are a "contract" under which the service provider (IRCTC/Indian Railways) agrees to supply services to the consumer. 

"As per the instruction given on September 23, 2017, in the event of a ticket cancellation, the refund amount payable as per the Railway Cancellation of Tickets and Refund of Fare Rule, as well as the complete amount of GST charged at the time of purchase, is refunded in full." Indian Railways, however, retain the cancellation/clerkage charges as per the Refund rule, as well as the GST amount on the cancellation/clerkage charge. This is only applicable in AC Executive and AC First Class. The Finance Ministry collects GST on its behalf. "There has been no change in the regulations or provisions." According to the Ministry of Railways

WHY IS THERE GST ON CANCELLATION?

According to the circular, purchasing a railway ticket is a contract in which the service provider agrees to supply services to the customer. When a passenger breaches the contract by cancelling a railway ticket, the service provider is rewarded with a modest amount collected as a cancellation charge. According to the Finance Ministry circular, the cancellation charge would be subject to GST because it is a payment rather than a violation of the contract.

CANCELLATION CHARGES

• AC Executive Class or 1st-AC coach tickets are subject to 5% GST, cancellation fees will be subject to the same rate.
• The Indian Railways charges Rs 240 for cancelling an AC first class or AC executive class ticket 48 hours before the train's departure.
• Passengers pay 5% GST at the time of purchasing these tickets.
• According to a recent circular issued by the Finance Ministry, travellers must also pay the same amount of GST on Cancellation Fees. If a confirmed AC first class ticket cancellation, a traveller must pay an additional Rs. 12 (5% of 240) towards GST.
• Railways will levy a cancellation fee of Rs 200 for confirmed AC 2-tier tickets and Rs 180 for a confirmed AC 3-tier ticket (if they are cancelled 48 hours before the departure of the train).
• If a confirmed ticket is cancelled within 48 hours to 12 hours of the train's scheduled departure, a cancellation fee of 25% of the ticket value is levied.
• If passengers cancel confirmed tickets between 12 and 4 hours before departure, they must pay 50% of the booking fee.

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