Services Provided by Indian Railways and Intra-Rail Supplies to be Exempt from GST: 53rd GST Council Meeting

The 53rd GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, has announced the exemption of services provided by Indian Railways and intra-rail supplies from the Goods and Services Tax ( GST ). “The purchase of railway tickets and payments for waiting room and cloak room charges have been exempted from GST. Similarly, no GST will be levied on services provided like battery-operated vehicles and intra-railway services”, the minister added. The exemption is expected to reduce the financial burden on the Indian Railway, thereby enabling it to allocate more resources to improving infrastructure and services. This could lead to reduced ticket prices for passengers, especially for first-class and air-conditioned coaches. Businesses that rely on railways for freight transportation may also benefit from lower logistics costs, which could potentially lead to lower prices for consumers. As per the ongoing GST provisions, the supply of goods and services by Indian Railways is taxable under the Forward Charge Mechanism. For the services rendered by railways to unregistered persons, invoices were to be issued under the forward charge mechanism by Railways for taxable value plus GST and remitted to the government. In respect of all taxable services provided by government entities, the suppliers of such services were so far liable to collect and remit GST on a forward charge basis. GST has not been particularly beneficial to passengers who are consumers because the effective service rate, which was 4.5%, was increased to 5% by GST. In fact, this taxation structure often led to increased costs for both passengers and freight operators. However, the new decision may improve the overall standards of the rail network and enhance passenger amenities. Furthermore, the GST Council meeting has also taken significant measures to facilitate trade and simplify processes for businesses and individuals alike. The 53rd meeting of the GST Council concluded at Bharat Mandapam in New Delhi today. Chaired by Union Finance Minister Nirmala Sitharaman, the meeting saw the participation of Union Minister of State for Finance Pankaj Chaudhary, Chief Ministers of Goa and Meghalaya, Deputy Chief Ministers of Bihar, Haryana, Madhya Pradesh, and Odisha, along with Finance Ministers from various States and Union Territories (with legislatures), and senior officials from both Union and State governments.

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