GST : Indian Railway

Indian Railway and GST

As per India government announcement GST (Goods and Service Tax) will be implemented in India from July 1st 2017 on-wards. The aim of GST implementation is to restructure the tax structure in India to reflect one Nation one Tax method like other countries already having. This will obviously impact several areas of Indian rail transactions as well. For making awareness to common people we are hereby explaining how it will impact in India Railway. Indian Railway and GST are following. GST : IRCTC Food Menu Rates Revised

Impact of GST on Parcel and Freight Segments in Indian Railway

Updated : 01.07.2017

Following are the impact of Goods and Service Tax on Parcel and Freight segments.

GST Impact on Parcel Segment

  • It has been decided to levy GST in place of Service tax including Cess on transportation of Parcel Traffic (leased or non – leased) by rail.
  • The detailed procedure for the levy of GST on transportation of parcel traffic by rail is the following. 
  • GST will be levied for transportation of all description of parcel traffic (leased or non-leased parcel traffic) and merchandise items (for commercial use) booked as luggage. 
  • Luggage traffic i.e personal baggage belonging to the traveling passengers, (Excluding merchandise items for commercial use), shall be exempted from GST. The details of the commodities exempted from GST shall be as under:-
    • Relief materials meant for victims of natural or man-made disasters, calamities, accidents, or mishaps.
    • Defense of military equipment
    • Newspaper or magazines registered with the Registrar of Newspapers
    • Railway equipment or materials
    • Agricultural produce
    • Milk, salt and food grain including flours, pulses, and rice
    • Organic manure
  • The rate of GST shall be 5% on total freight 
  • GST will be levied on the total freight as reflected in the Parcel Way Bill and/or Luggage ticket and/or Money receipt (in case of leased traffic) issued on or after 01.07.2017 and it will be collected at the time of booking and preparation of Parcel Way Bill/Luggage ticket /Money receipt. 

GST Impact on Freight Segment

  • It has been decided to impose 5% GST rates on Goods and Service for transportation of Goods by rail.
  • It will be levied on total freight charges
  • This rate will also be applicable to all ancillary charges levied on transportation of Goods Traffic.
  • Some essential commodities which have been exempted from levy of GST as given below.
    • Relief Material for victims of natural or man made disasters, calamities, accidents or mishaps.
    • Defence or military equipments
    • Newspaper or Magazine registered with the registrar of Newspaper
    • Railway Equipments or materials
    • Agriculture produce
    • Milk, salt and food grain including flours, pulses and rice
    • Organic manure

GST : Clarification by Railway

Updated : 30.06.2017

Ministry of Railway made clarification regarding Media News on impact of GST in Indian Railway through a press release. Railway said that Railway is not introducing any new facilities w.e.f 01.07.2017. Railway published this to avoid confusion in the minds of the rail users. In this context, Ministry of Railways would like to clarify following : 

  • There are as such no new changes being introduced from 1st July, 2017; the only new thing is that Railways, like other departments,is rolling out GST w.e.f 1st July, 2017.(separate press release on GST is available)
  • Railways has been selling waitlisted tickets both through online (e-ticket) and PRS counters. There is no change in this scheme and railway will continue to sell waitlisted tickets through both online and PRS counter.
  • Railways has been running Suvidha Class of Trains since July, 2015, and such trains will continue to run. The waitlisted ticket in such trains is also available, if required. Provision of partial refund in case of Suvidha Train Tickets is available right from the beginning of the scheme. Hence, no new changes in this regard.
  • Railways have notified new refund rules in November, 2015.There rules are still continuing and there is no change in them.
  • There is no proposal to discontinue paper tickets for Shatabdi and Rajdhani trains and for that matter in any class of train. However, for passengers booking tickets online (i.e. E-Tickets) the tickets received by SMS is a valid authority for travel along with permissible proof of identity.
  • The booking time for Tatkal Tickets was changed in 2015 with booking for AC classes opening at 10:00 AM and for Non-AC classes at 11:00 AM. one day in advance of actual date of journey excluding date of journey. There is no change in these timings and the same arrangement is continuing.
  • Again there is no change in the refund rules of tatkal tickets. Under the existing rule, no refund is granted on cancellation of confirmed Tatkal tickets/ duplicate tatkal ticket. This rule continuous to be in operation.
  • Railways is already running its destination alert facility on its helpline number 139. In addition, a free destination alert service in some Rajdhani and Shatabdi trains was also introduced on a pilot basis for train arrival at destination between 11:00 AM to 6:00 AM already available. So there is no change in this facility also.
  • There is no such proposal to make Aadhaar mandatory for availing train concessions.
  • There is no proposal for printing tickets (both, e tickets and PRS tickets) in regional languages.
  • There is no proposal to run duplicate trains. We, in anyway, run special trains to clear the rush during peak season on identified popular routes as per the traffic requirements and operational feasibility.
  • Railways have launched ‘VIKALP’, Alternative Train Accommodation Scheme(ATAS) on November 1,2015 with a view to provide confirmed accommodation to waitlisted passengers and also to ensure optimal utilization of available accommodation. This facility was initially started on New Delhi – Jammu, New Delhi – Lucknow, Delhi – Howrah, Delhi – Chennai, Delhi – Mumbai and Delhi – Secunderabad Circuits. Now this scheme was expanded to all the sectors on March 22,2017.

 Impact of GST in Train Fare

Updated : 24.06.2017


From July 1st onwards, the Goods and Services Tax (GST) will replace service tax including cess on railway tickets, Railway announced through a circular. The detailed procedure for implementation of GST on transportation of passengers by rail is following.

  • GST will be levied on the fare of passenger services in place of service tax on the following classes : – AC First Class, Executive Class, AC-2 Tier Class, AC-3 Tier Class, AC Chair car Class, AC Economy Class, First Class, AC and First Classes Coaches of special trains/coaches on FTR, All other type of First Class and AC Class coaches. 
  • The rate of GST shall be 5% on total fares .
  • Duty Pass, Privilege Pass or any other Complimentary passes which are not reimbursed to Railway, where no money transaction is involved , GST shall not be levied. 
  • On concessional tickets/Privilege ticket Orders (PTOs) tickets etc., GST shall be levied at the prescribed rate on total actual fare collected after concession. 
  • GST amount shall be rounded of.
  • To implement GST, from 01.07.2017 onwards certain facility available in AC Classes and First Class Tickets shall be withdrawn. Facilities including:-  Circular journey tickets shall be discontinued, Issue of AC Class tickets from UTS counter shall be discontinued, Issue of cluster tickets from PRS (not from UTS) shall be discontinued. In any other case if combined tickets are issued except season tickets the same may be discontinued and only point to point tickets may be issued in AC Classes and First Classes. In case of combined return Journey tickets, separate tickets for onward Journey and return journey tickets will be issued for UTS or PRS tickets. But Suburban UTS tickets for which journey originating/terminating station is within the same state/same UTS issue of combined return journey ticket over suburban section shall continue. 
  • GST will be applicable on tickets issued on or after 01.07.2017. Difference of fare shall not be collected on the tickets booked in advance.
  • In case of Mobile tickets, location of supplier shall be originating station and mobile tickets shall be issued only to unregistered users. 
  • Cancellation of Tickets : -In the case of tickets that were booked before July 1 but cancelled after the date, the entire amount along with service tax will be refunded after the cancellation charge is deducted. However, an amount calculated on the GST rate will be deducted on the cancellation or clerkage charge applicable. In the case of cancellation of tickets booked after July 1, the total amount, inclusive of the GST charged at the time of booking, will be refunded with a deduction of the cancellation or clerkage charge. The GST amount on that charge will be retained by the railways.

Rail Goods Transfer May Cheaper After GST 

Updated : 24.06.2017

A famous news paper in India reported that Transporting merchandise through rail might be a less expensive alternative than shipping them by street, post the rollout of the products and ventures assess (GST). This is on the grounds that the railroads can assert input impose credit on the 5% GST pertinent on the administration gave, while armada proprietors can’t. 

As indicated by armada proprietors, post take off of GST, clients may want to transport products by the railroads since it will work out less expensive contrasted and roadways. Info impose credit that the Indian Railroads will assert on the 5% GST material on its administrations will be in the long run passed on to the clients. Armada proprietors then again won’t have the capacity to assert any information charge credit as diesel — one of the fundamental info costs — has been kept outside the domain of the new duty law. The crude materials that are required by armada proprietors to give administrations to their clients have not been considered by the GST Committee; introductions have been made by the vehicle relationship to the authorities of both fund and street transport service in such manner. 

Transport serve Nitin Gadkari has assembled a conference with every one of the partners of the vehicle and car industry on June 23. “An armada proprietor’s information taken a toll is the interest in the vehicles, protection cost of the driver, support of the foundation in focal and provincial workplaces and diesel for which we can’t guarantee an info impose credit. This will build our cost and make us uncompetitive against railroads,” said All India Engine Transport Congress (AIMTC) president Navin Mehta. 

The transporters additionally need the execution of GST to be conceded by two months so that it likewise incorporates the e-way Bill, which will evacuate the motivation behind keeping check posts at state fringes. “The Union government needed to offer GST by saying that it will evacuate the check posts at the state outskirts and make development of products consistent. Without the usage of the e-way Bill, check posts will proceed and armada proprietors will keep on facing the current issues,” said SP Singh, senior individual, Indian Establishment for Transport Exploration and Preparing (IFTRT). “There is a touch of separation among railroads and trucks under GST however it’s probably not going to have any noteworthy effect on the business for trucks. Indeed, even today, transporting products by railroads is less expensive contrasted and trucks yet the last corners the heft of the merchandise transport business as a result of more prominent proficiency, while the railroads experiences issues like clog and inconsistency,” said Vishwas Udgirkar, accomplice, Deloitte. Starting at now, just about 36% of the aggregate cargo gets transported by railroads and around 55% gets transported by roadways since armada proprietors offer point-to-point benefit, which is more advantageous for clients.

GST Registration is must for all Railway Business

Updated : 19.06.2017

All Contractors, Suppliers/Vendors/Service providers doing business are required to migrate/register under GST regime

South Eastern Railway announced that the GST Roll-out will be with effect from 01.07.2017. For implementation of GST in South Eastern Railway firms which have not migrated to or registered with GST regime will not be able to participate in any tender of this Railway. 

Any offer received from the firms without GST registration details will be summarily rejected. All the existing Suppliers, Contractors and Service Providers will have to migrate or get themselves registered under GST in their respective states for continuation of their existing contracts failing which their tenders will be short – closed or terminated. Railway reserves the right to terminate such contracts without assigning any reasons. 

Consultant Study For GST Impact

Updated : 25.05.2017

Indian Railways will appoint a consultant to study the overall impact of the goods and services tax (GST) – both as a procurer and as a service provider, a famous Newspaper reported.

Railway Minister Suresh Prabhu said he had already started talks with top experts personally. “But institutionally, I have asked Railways to consider a consultant to study GST. Not only us, we need to have a strategy in place for this,” Prabhu said, Newspaper reported. 

“In data monetisation, the first step will be data analysis. Data is like a dump yard. You have all kinds of municipal solid waste, which you first dump. Then, we segregate it. What we are going to do in Railways has not happened anywhere in the world. We have to set our own example first. So, the first step to that is data analytics.” It is early to say, whether the Railways will be using another agency or partner with somebody for data analytics.

“We will not compromise on privacy. It is your data pertaining to credit card. But the same time, there are possibilities. It is a new business model that we have to develop. Therefore, we have to work on it,” Prabhu said.

Regulator soon

The Minister said that the Railways would have a regulator at the earliest. “We are keen to have a regulator as soon as possible. We have sent a proposal to the department of personnel and training. As soon as it approves and the Cabinet approves,” he added.

This may be the first year of the merger of the Railway Budget with the main budget, but the Railway Minister maintained that nothing has changed as far as he is concerned. “Nothing has changed except that I don’t present the budget in Parliament,” he said.

Another online Newspaper reported that Passengers will experience a dramatic change in speed and punctuality of Indian trains by 2020, railway minister Suresh Prabhu said in an interview. Prabhu said that investments and reforms introduced in Indian Railways have already started showing results and the national carrier has no competition from cheaper flights as the railways will remain the preferred mode of transportation for millions of people.

“GST definitely going to impact. GST will impact everybody. When the cyclone comes nobody can say I’ll not be affected. It’s a sweeping reform and will certainly impact the railways and transport sector. How it’s going to affect railways we have to study properly and try to strategize. We cannot say that GST has come and I’m not going to do business. With it, new opportunities will come. I look at it as a major opportunity because the global market will be created through it. Inter-state transfers will increase because of GST. Roads will have an advantage on short distances while railways have an advantage over long distances. So railways can benefit for sure. However, that doesn’t mean that railways should sit idle. We must have a proper dynamic business strategy which cannot be constant and needs to be evolving and changing”, Prabhu said, Newspaper reported. 


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