The Ministry of Railways in a circular said that as per instructions issued on 23 September 2017, in case of ticket cancellation, the amount due will be refunded as per fare refund policy along with the amount received at the time of booking. The total GST amount charged is also refunded in full.
However cancellation or clerkage charges are applicable as per refund policy and the GST amount on cancellation or clerkage charges is still retained by the Railways, which is payable by the customer. This applies only to A and I class. GST is collected by the Ministry of Finance. Apart from this, there will be no change in other regulations.
Why GST on cancellation?
The notification explains that booking a train ticket is a contract where the service provider promises to provide service to the customer. When the contract is breached by the passenger, the train ticket is canceled and the service provider is compensated a small amount, which is collected as a cancellation charge. Since the cancellation charge is a payment rather than a breach of contract, it is also subject to GST.
Published by:Mohammad Rahman Pasha
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