Understand the GST on Train Tickets

The implementation of GST (Goods and Services Tax) in India led to major changes across many industries, including the Indian Railways. Since trains are a primary mode of travel for millions, it is important to know how GST affects ticket pricing and services. This is especially useful for both daily passengers and business travellers planning their journeys. However, local passenger train is exempt from taxes. In this blog, you will learn everything about GST on train tickets in India.

What is GST?

Goods and Services Tax (GST) is a comprehensive, multi-stage, and destination-based indirect tax system introduced in India on 1st July 2017. It replaced multiple older taxes like VAT, excise duty, and service tax. This focuses on simplifying the tax structure. GST is levied at each stage of the supply chain and is determined by the location where the goods or services are ultimately consumed. Its main goal is to create a unified tax system and avoid the problem of multiple taxation.

What is GST on Train Tickets?

Goods and Services Tax (GST) is an indirect tax that applies to the sale of goods and services across India, including railway travel. If a person books a train ticket, GST is added to the fare and included in the total amount they pay. It becomes an important part of total payment for the journey.

Railway tickets in India generally fall under the 5% GST rate, which applies whether you book online or at the station. However, the exact GST amount can change based on the class of travel and certain exemptions. Understanding these details helps passengers know how much tax is added to their fare.

GST Rates on Train Tickets: AC vs Non-AC Classes

Here are the GST rates on Train Tickets:

1. Air-Conditioned (AC) and First-Class Travel

GST is charged at a rate of 5% on AC classes and First Class Tickets. However, service providers cannot claim Input Tax Credit (ITC) on these services. This rate applies to classes such as First Class, AC Chair Car, AC 3-tier, AC 2-tier, and Executive Class.

    2. Non-AC Classes (Sleeper, Second Class, General)

Non-AC train classes, such as Sleeper Class, Second Class (both reserved and unreserved), and General Class, are exempt from GST. This means passengers traveling in these classes do not have to pay any additional tax on their fares.

For the most accurate and up-to-date information, it's advisable to check the fare breakdown during booking on the IRCTC platform or consult official Indian Railways notifications

GST on Tatkal and Premium Train Services

According to India's Goods and Services Tax (GST) framework, train ticket fares for both Tatkal and Premium Tatkal services are subject to specific tax rates and conditions.

Here are the GST Rates and Applicability:

• GST on Tatkal Train Services: Tatkal train services are subject to a 5% GST, which is split equally between Central GST (2.5%) and State GST (2.5%). This applies to all classes, including Non-AC. The Tatkal charges are considered part of the overall fare and are made taxable.
• GST on Premium Train Services: GST is charged at 5% on the base fare and 18% on additional services like meals and excursions. This applies to luxury trains such as Palace on Wheels and Maharajas' Express, which offer high-end travel experiences.

Impact of GST on Train Ticket Cancellations

As of May 2025, the Goods and Services Tax (GST) applicable to train ticket cancellations in India is determined by the class of travel and the nature of services availed. Below is the updated information:

1. Cancellation Charges

When a train ticket is canceled, GST is applied to the cancellation fee depending on the class of travel. For AC and First-Class tickets, a 5% GST is charged, divided equally between Central GST and State GST. On the other hand, cancellations for Non-AC classes like Sleeper, Second Class, and General are exempt from GST.

If applicable, you will be charged GST as described:

GST is applied only to the cancellation fee when a train ticket is refunded. It does not apply to the full fare. For example, if a passenger cancels an AC ticket with a Rs. 1,000 fare and Rs. 100 cancellation fee, 5% GST is charged on the Rs. 100 cancellation fee. This amounts to Rs. 5 in tax. If you cancel in particular time frame, you will get refund or it might be totally forfeited.

GST on Freight and Parcel Services

Here is the GST on Railway Freight and Parcel Services:

1. Taxable Services

• Freight Transportation: Indian Railways charges GST on freight services. This means goods transported by train are taxed under the Goods and Services Tax system.
• Parcel Services: Services related to the transportation of parcels by rail are also taxable under GST.

The applicable GST rate for these services is 18%

2. Exemptions

• Relief Materials: Transportation of relief materials meant for victims of natural or man-made disasters is exempt from GST.
• Defence or Military Equipment: Transportation of defence or military equipment is exempt from GST.
• Newspapers and Magazines: Transporting newspapers or magazines that are registered with the Registrar of Newspapers is not subject to GST.
• Agricultural Produce: Transportation of agricultural produce is exempt from GST.
• Milk, Salt, and Food Grains: Transportation of milk, salt, and food grains including flours, pulses, and rice, is exempt from GST.
• Organic Manure: Transportation of organic manure is exempt from GST.

3. Forward Charge Mechanism (FCM)

The Forward Charge Mechanism (FCM) under GST means that the supplier is responsible for collecting and paying the tax on goods or services. In contrast to the Reverse Charge Mechanism, where the recipient handles the tax, FCM requires the supplier to account for GST when the goods or services are supplied.

Goods Transport Agencies (GTAs) have the option to choose the forward charge mechanism. They can collect and pay GST at a rate of 5% (without Input Tax Credit) or 12% (with ITC), after filing an annual declaration.

GST on Online Train Ticket Bookings through IRCTC           

When booking train tickets online through IRCTC, GST is applied to the convenience fee for using the platform. This fee supports the online booking system. An 18% GST is charged on the convenience fee. The tax is calculated on the total payable amount for the ticket.

GST on Group Bookings and Business Travel

Here is the applicable GST for group bookings and business Travel:

1. Group Bookings

IRCTC allows passengers to charter entire trains or reserve exclusive coaches. If you are travelling in Ac or first class, you need to pay 5% GST on the total fare. A convenience fee of Rs. 100 plus GST per ticket is charged. These services can be conveniently booked through the IRCTC Corporate Portal, which makes corporate travel easier.

2. Business Travel

Businesses are allowed to claim Input Tax Credit (ITC) on GST paid for train travel expenses incurred for official use. To avail of ITC, the company's GSTIN must be provided during booking, and the GST invoice must be obtained. AC and First Class train tickets are taxed at 5% GST, while the convenience fee levied by IRCTC attracts an 18% GST rate.

How to Calculate GST on Train Tickets?

Here is the step-by-step process to calculate the Goods and Services Tax (GST) on train tickets booked through IRCTC (Indian Railway Catering and Tourism Corporation):

Step 1: Determine the Base Fare

You must begin by identifying the base fare of your train ticket. This is the basic cost of travel and does not include extra charges like reservation fees, catering costs, or superfast surcharges.

Step 2: Identify the Applicable GST Rate

GST on train tickets depends on the class of travel: AC and First Class tickets attract 5% GST, while Sleeper and Second Sitting (2S) classes are exempt from tax.

Step 3: Calculate the GST Amount

To find the GST amount, you need to multiply the base fare by 5% if you are traveling in AC or First Class.

Step 4: Total Fare Calculation

The base fare for AC and First Class tickets is increased by GST to find the total fare. In contrast, for Sleeper and Second Sitting (2S) classes, the base fare itself constitutes the total fare. For instance, if an AC 3-tier ticket costs Rs. 1,000, a 5% GST adds Rs. 50, which makes the total fare Rs. 1,050.

GST Exemptions on Train Tickets

As of July 15, 2024, the Indian government has implemented significant changes to the Goods and Services Tax (GST) applicable to train travel and related services.

Here is a detailed explanation of GST Exemptions on Train Tickets and Related Services:

• Passenger Train Tickets: Currently, no GST is applicable on any train travel class, including AC, First Class, Sleeper, and Second Class. Previously, a 5% GST was applicable on AC and First Class train tickets.
• Platform Tickets and Station Services: GST is no longer applicable to platform tickets, retiring rooms, waiting rooms, cloakroom facilities, and battery-operated car services provided by Indian Railways.
• Catering Services: Food and beverage services offered on trains and at railway stations are now GST-exempt which makes meals more affordable for passengers.
• Freight Services: Transportation of goods by Indian Railways is also exempt from GST, potentially reducing logistics costs for businesses.

Impact of GST on Train Travel in India

Below is a detailed analysis based on the latest official information:

• Fare Structure Adjustments

GST of 5% is applied to air-conditioned (AC) and first-class train tickets. Non-AC travel classes such as Sleeper and Second Class are exempt from GST. This means passengers traveling in these classes do not incur any additional tax charges.

• Input Tax Credit (ITC) Benefits

Input Tax Credit (ITC) under GST allows businesses to reclaim the tax paid on inputs, which helps to reduce their overall tax liability. This benefit also helps improve cash flow and supports investment in the transportation sector. 

• Enhanced Transparency and Compliance

The GST regime has introduced standardized invoicing and digital record-keeping for train travel services. Passengers receive GST-compliant invoices detailing fare breakdowns, taxes applied, and other charges. This helps to promote transparency and facilitates easy compliance for businesses claiming ITC on travel expenses.

• Impact on Ancillary Services

Ancillary services in Indian train travel are designed to improve the overall travel experience by offering extra comfort and convenience. This services is offered by IRCTC and other partners. These services include options like accommodation (retiring rooms, hotels, lounges), travel assistance (bus or flight transfers), and onboard amenities such as meals and entertainment.

• Operational Efficiencies

Improvements in Indian Railways' operations have resulted in faster and more reliable train services. These advancements enhance the passenger experience, boost capacity, and make travel more efficient for all travellers.

Conclusion

GST on train tickets has transformed railway travel in India by revising fare structures, enhancing transparency, and simplifying tax compliance. While AC classes incur a 5% GST, non-AC travel and certain services remain exempt, which reduces costs for passengers. These changes have led to better efficiency and accountability within Indian Railways, which benefits both travellers and businesses.