Now food and drinks sold by IRCTC on railway stations and inside trains will carry five per cent GST. The finance ministry conveyed its decision to the Railway board last week.
The Central Board for Excise and Customs (CBEC) today issued orders that a flat five per cent GST will be charged on food and drinks with the sellers getting no benefit of Input Tax Credit.
This move is expected to reduce the rampant profiteering by food licensees who sell a same product at different and exorbitant rate.
Different GST rates were being applied in mobile and static catering in Indian railways till now. As a result, a single licensee (selected by Indian railways/ IRCTC) supplying the same food item was charged GST at different rates. This resulted in different rates being passed down to the passengers.
Worse the licencees were increasing their profits by not passing on the input tax credit benefit which they were getting.
The unsuspecting passenger was not aware which GST rate was applicable to the food ordered by them. And in the absence of this clarity, licencees according to sources used to charge higher GST even when lower rates were applicable.
After several complaints of passengers being overcharged the railways last year had notified the rate list of various items and fixed meals. However, the profiteering was not ending and litigations have been piling up.
The GST council which has been working on rationalising the GST rate spoke to stakeholders and finally came up with a plan to introduce a uniform application of tax rate in respect of food and drinks in/by Railways.
Railways has been getting too many complaints of poor quality food being sold at non-prescribed rates. Sources in the railways ministry say that a fresh awareness drive for consumers to seek bill for purchases at stations and trains is likely to start to check the practice of hiding sales by the licensees.
