Cancellation of confirmed train tickets, too, will now attract GST, on cancellation charges for that particular class of travel, according to a circular issued by the Ministry of Finance on August 3.
Why GST on cancellation?
The circular – issued by the ministry’s Tax Research Unit (TRU), – explains that booking of tickets is a ‘contract’, under which the service provider (IRCTC/Indian Railways) promises to provide services to the customer.
“When the contract is breached by the passenger, the service provider is compensated with a small amount, collected as a cancellation charge. Since the cancellation charge is a payment, and not breach of contract, it will attract GST,” the notification said.
