The Railways Ministry has clarified rules governing cancellation and refund of tickets and has said there has been no change in such provisions. The ministry said that after a ticket is cancelled the fare amount – and the amount of GST (Goods and Services Tax) charged at the time of booking – would be fully refunded to the passenger.

The ministry cited information as per previous instructions issued in September 2017.

The ministry, however, explained the cancellation charges due, saying that as per the rules on refunds this fee (and the GST applicable on the fee) will be retained by the Railways.

Further clarifying the rule, the ministry said it would only be applicable in case of AC and First Class tickets, and that the GST collected is done so on behalf of the Finance Ministry.

On August 3, the Finance Ministry had issued guidelines on the implementation of GST on cancellation charges of confirmed train tickets.

Railway’s Tax Research Unit (TRU) explained in the circular that booking of tickets is a ‘contract' under which the service provider – which in this case is the Indian Railways – promises to provide services to the customer. The circular read that the cancellation charges of railway tickets for a class would attract GST at the same rate as applicable to the class.

Understanding this rule using an example, it would mean that the rate is 5 per cent GST for first-class or AC coaches, while cancellation fee for this category is ₹240 (per passenger). Therefore, the total cancellation cost will be ₹252 ( ₹12 tax + ₹240) for First Class / AC compartments. However, there is no GST on other categories, including second sleeper class.

The complete Circular can be accessed at
https://indianrailways.gov.in/railwayboard/uploads/directorate/accounts/downloads/compendium_2022/LD%20Circular.pdf

Source: The Hindustan Times 
https://www.hindustantimes.com/india-news/railways-explains-the-new-gst-rules-applicable-on-cancelling-confirmed-tickets-101661778963837.html