Premium class train travel to become slightly expensive from July 1

GST at 5% would be collected on air-conditioned and first class tickets instead of 4.5% service tax

If tickets were booked in advance for journeys commencing on or after July 1, the Railways will not collect the difference of fare.

As the Indian Railways is gearing up to implement the Goods and Services Tax (GST) from July 1, travel in air-conditioned and first class is set to become a tad expensive. GST at 5% on total fare will be applicable instead of the present 4.5% service tax.

Moreover, some facilities, including circular journey tickets, popular for the flexibility during pilgrimage /tour, will be discontinued for these classes from July 1.

Currently, the service tax of 4.5%, includes various cesses like Swachh Bharat Cess and Krishi Kalyan Cess.

Commercial Circular 41 of 2017, issued by the Ministry of Railways on June 23, however, does not allow rounding off of the GST, unlike service tax which was being rounded off to the next highest multiple of ₹5 hitherto. At the same time, it allows rounding off of the total chargeable fare, including super-fast charges and reservation fee, to the next highest multiple of ₹5.

For example, the fare in 2nd AC class journey between Bengaluru and Mangaluru Central at present is ₹1,160 — ₹1,060 base fare, ₹50 reservation charge and ₹50 service tax. The service tax should have been ₹47.7 at the rate of 4.5%. Under GST, the tax component would be ₹53.

For proper calculation of GST and facilitating its sharing between the Centre and the State/ Union Territory concerned, Indian Railways would get registered in every State so that the location of the supplier would be the State from where the ticket or invoice has been issued.

Facilities withdrawn

The circular makes it mandatory to issue separate tickets for onward and return journey in case of combined return journey tickets. Also, unreserved ticket issuing counters would stop issuing AC class tickets from July 1.

If tickets were booked in advance for journeys commencing on or after July 1, the Railways would not collect the difference of fare, the circular said. The Ministry has asked the Centre for Railway Information System to make necessary changes in the software while asking zones to advise the CRIS by June 26 to enable testing State/UT-wise GSTIN.

No circular journey in AC class

Circular journey ticket, popular among those undertaking pilgrimage and tour, will take a hit with the introduction of GST.

From July 1, circular journey tickets would not be issued to all air-conditioned and first-class journeys, the Ministry of Railways has said.

Through these tickets, passengers used to undertake journeys to different locations on different trains. The tickets offered flexible travel, allowing maximum of eight break journeys.

Some railway zones have even designed standard circular journey tickets to popular pilgrimage/tourism destinations. The tickets give the benefit of telescopic rates, considerably lower than regular point-to-point fares.