Cancellation charges levied on hotel room booking, train ticket booking, or entertainment show booking will be subject to GST
GST will be levied on cancellation charges
If you book hotels, tickets or any entertainment show thinking that if you can not go, then cancel it and take refund, then this news is for you only. The Finance Ministry has clarified that the cancellation is related to the service, so on the cancellation charges. GST As will have to pay extra money. The Tax Research Unit of the Ministry of Finance has issued 3 circulars giving many clarifications regarding GST. One of which is related to ticket cancellation.
What does the circular on cancellation say
In one of these 3 circulars, clarification has also been given on the situation where income is being earned on breach of a contract. In common language, it can be called booking cancellation because booking is a contract where there is talk of providing service. When the customer cancels this contract, the service provider receives an income as cancellation charge. Because cancellation charges are the cost of ensuring a service and canceling a service. In such a situation, GST will be levied on this income.
How will GST be calculated?
On ticket cancellation, GSAT will be levied on cancellation charges. If you buy a ticket like a train ticket and the cancellation charge on it is Rs 100, then GST will be applicable on Rs 100. This rule will be applicable to all types of bookings which include train tickets, hotel bookings, booking of any show etc.