GST on Cancellation of Confirmed Train Tickets

Ticket booking is a ‘contract’ under which the service provider (IRCTC/Indian Railways) agrees to supply services to the client. Cancellation of confirmed train tickets will now trigger GST on cancellation costs for that specific class of travel.

“When the passenger breaches the contract, the service provider is paid with a minor fee collected as a cancellation fee. Since the cancellation fee is a payment and not a penalty for breach of contract, it is subject to GST, according to the notification.

It was noted that the GST rate applicable to cancellations of bookings for a certain class would be the same as that applicable to reserving seats/berths for that class. For example, the rate is 5% for first-class or air-conditioned coaches, while the cancellation charge is 240. (per passenger). Therefore, the total cancellation fee for first-class/AC compartments will be 252 (12 tax + 240). However, other categories, including second sleeper class, are exempt from the GST.

However, the aforementioned 240 cancellation fee applies if the ticket is cancelled 48 hours or more before to the train’s planned departure.

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