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GST on Train Tickets

GST on Train Tickets

GST on Train Tickets

The Indian Railways has been brought under GST for both its passenger transportation as well as its goods transportation. Prior to the implementation of GST, service tax was applicable to the transport of passengers and goods. In addition, the Indian Railways also enjoyed 70% abatement, which made only 30% of the value taxable under service tax of 15%, which means 4.5% of the total fare.

GST for Railway Passengers

With the implementation of GST, end consumers now pay 5% in GST on the full ticket price, up from 4.5% of service tax. However, any passenger that makes use of the Indian railways to travel for business purposes can file input tax credit (ITC) claims on ticket prices. Doing so helps business owners reduce their expenditure on railway usage.

GST Implementation for Goods

Transportation of goods is also currently set at 5% GST, but the effective rate can be brought down by businesses to 4.5% by filing input tax claims. With no input tax credit available for the transportation of goods via Goods Transportation Agencies.

Sale of Goods Transported

The GST Council defines “goods” as per clause (7) of section 2 of the Sale of Goods Act, 1930 (3 of 1930). GST for goods that fall under the Act are divided into multiple categories.

  • Commonly used Goods and services – 12%
  • Standard Goods and Services – 18%
  • Special Goods and Services – 28%
  • Luxury Goods and Services – 28%
  • Most essential goods and services – Nil/Exempted from GST

Taxable Persons under Rail Transportation

B2B supplies fall under input tax credit exception. Business owners are expected to follow the invoice matching concept to claim ITC. IRCTC records the GSTIN of all businesses that businesses which avail transportation services for record verification.

Unregistered Persons under B2C

All B2C supply records are maintained by the IRCTC and GST is applicable on all B2C activity.

Exemption under GST for Transportation of Goods

The following goods are exempt from GST

  • Relief material for areas struck by disasters
  • Military/Defence personnel equipment
  • Newspapers/magazines recognised by the Registrar of Newspapers
  • Railway equipment and materials
  • Agricultural produce
  • Manure (Organic)
  • Agricultural products
  • Essential commodities (Milk, food grain and salt)

Reduction of GST Rates for Rail Equipment Manufacturers

With the latest GST notification, the following entries have been inserted as of October 1, 2019. Manufacturers of the following equipment will be eligible for input tax credit following the GST council’s approval of increasing GST from 5% to 12% in the latest GST update.

  • Rail locomotives that are powered by external sources of electricity or by using electric accumulators.
  • Rail locomotives, locomotive tenders, steam locomotives, diesel-electric locomotives and their tenders.
  • Self-propelled vans, trucks, tramway coaches.
  • Maintenance and service vehicles, non-self-propelled vehicles like trucks, track inspection vehicles.
  • Railway and tramway passenger coaches, post-office coaches and other special purpose railway/tramway coaches.
  • Railway or tramway wagons and goods fans (non self-propelled)
  • Axles, wheels, bogies, Bissel-bogies and other parts of railway locomotives
  • Railway tracks, fixtures, safety signalling tools, traffic control equipment, parking facilities, port installations, airfields, roads for railway purposes.