GST On Cancellation of Confirmed Train, Hotel And Flight Bookings: Details Here

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The Ministry of Finance has imposed a GST on the cancellation of confirmed train tickets and hotel bookings, making travel more expensive and burdening your wallet.

According to a circular issued by the Finance Ministry’s Tax Research Unit (TRU) on August 3, purchasing a ticket is a “contract” in which the service provider (IRCTC/Indian Railways) promises to provide services to the customer. Hence it would attract Goods and Services Tax (GST).

GST On Cancelling Confirmed Train Ticket

According to the notification, the cancellation fee for a first-class or AC coach ticket would be subject to 5% GST, which is the rate levied on the ticket.

The cancellation charge, according to the Ministry, is a payment rather than a breach of contract, so GST must be paid. Cancellation of a ticket in such a case would now be subject to 5% GST on the cancellation charges.

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“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 a breach of contract, it will attract GST,” the notification stated.

According to the new circular, passengers must also pay the same amount of GST on cancellation fees. In the event of a confirmed AC first-class ticket cancellation, a passenger must pay an additional 12 per cent (5% of ₹240) towards GST.

When confirmed AC 2-tier tickets are cancelled 48 hours before the train’s departure, the railway charges a cancellation fee of ₹200 and a fee of ₹180 for confirmed AC 3-tier tickets.

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 amount is charged.

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For confirmed ticket cancellations between 12 and 4 hours, 50% of the booking amount is Charged.

Cancellation of a ticket in such a case would now be subject to 5% GST on the cancellation charges. However, there will be no GST on second-class sleeper ticket cancellations.

GST On Cancelling Hotel, Flight Booking

Customers who cancel their hotel, flight, other travel, or entertainment event reservations will be required to pay GST.

The same logic would apply to cancellations of air travel or hotel accommodations, where cancellation fees would be taxed at the same GST rate as the primary service.

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This is only applicable if there is a cancellation fee in the event of service cancellation. This is because the charges are regarded as the costs of ensuring that the service is provided to the individual, as well as the costs of cancelling the supply. As a result, they have all considered the consideration for the promised supply.


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