RailwaysMetro & High-Speed

GST on Railways & Metro — Tickets 5%/Exempt, Freight 5%, Metro Exempt

Complete GST guide for railways & metro: passenger tickets (5% AC / exempt sleeper), freight 5%, metro tickets exempt, IRCTC catering 5%, railway equipment 5-28%, metro construction 12%, station redevelopment, bullet train project, private train operations, and ITC blockage issues for metro corporations.

GST rates were revised in September 2025, and the rates on this page have not yet been checked by a tax professional against that revision. Confirm the current rate in the CBIC rate notifications before you invoice.

Passenger Tickets

Freight Transport

18%

Platform Ticket

Train Catering (IRCTC)

12%

Metro Construction (Govt)

18-28%

Railway Equipment

Exempt

Sleeper Class & Below

Rail Coaches/Wagons

Railways & Metro — GST Framework

Passenger Transport — 5% / Exempt

RAILWAY PASSENGER TICKETS: Sleeper class and below (unreserved, second class, sleeper): EXEMPT from GST. AC chair car (CC): 5% GST. AC 3-tier (3A): 5% GST. AC 2-tier (2A): 5% GST. AC first class (1A): 5% GST. Executive class (Shatabdi/Rajdhani): 5% GST. Vande Bharat (executive/chair): 5% GST. WHY SLEEPER EXEMPT: Railway is 'common man transport' — government exempted lower classes to keep affordable. 85%+ railway passengers travel in sleeper/unreserved — exemption benefits majority. IRCTC CONVENIENCE FEE: Online booking via IRCTC: convenience fee (₹15-40). GST on convenience fee: 18% (it's a service charge, not transport). So: AC ticket 5% + convenience fee 18% — two different rates on same booking. TATKAL CHARGES: Tatkal premium: part of ticket fare → same GST rate (5% or exempt based on class). CANCELLATION CHARGES: Ticket cancellation fee: 18% GST (service charge by railways). Refund amount: no GST (it's return of consideration). RAJDHANI/SHATABDI (with meals): Ticket includes catering: composite supply. Principal supply is transport (5%) — so entire ticket at 5%. Meal cost is embedded — not separately taxable at higher rate. PRIVATE TRAINS (Tejas — IRCTC operated): Same rates: 5% on AC classes, exempt for sleeper and below.

Freight Transport — 5% GST

RAILWAY FREIGHT: Transport of goods by rail: 5% GST (without ITC). Covers: Container movement by rail: 5%. Parcel services: 5%. Goods wagons (full rake): 5%. Small consignment (less than wagon load): 5%. WHY 5% WITHOUT ITC: Freight transport (all modes — road, rail, air, waterway): 5% without ITC OR 12% with ITC. Railways opted for 5% no-ITC (most shippers prefer lower rate). CONTAINER OPERATORS: CONCOR (Container Corporation): charges 5% GST on rail freight. Private container operators (Adani Logistics, Gateway Rail): 5%. Multimodal transport (rail + road): classified as GTA (Goods Transport Agency) — different rules. EXEMPTIONS: Transport of certain essential goods by rail: some exemptions for agricultural produce, milk, newspapers. Transport of defence goods by rail: exempt (government notification). COMPARISON — RAIL vs ROAD: Rail freight: 5% GST. Road freight (GTA): 5% (if GTA pays) or 12% (recipient pays under RCM). Road freight is complex (GTA/RCM issues) — rail is simpler. DEMURRAGE & WHARFAGE: Demurrage (delay in unloading wagon): 18% GST (penalty/service). Wharfage (storage at railway yard): 18% GST. Siding charges: 18%. Handling charges: 18%. Only the base freight is 5% — all ancillary charges are 18%.

Metro Rail — 12% Construction, Exempt Tickets

METRO RAIL PASSENGER TICKETS: Metro tickets (Delhi Metro, Mumbai Metro, Chennai Metro, etc.): EXEMPT from GST. Smart card recharges: EXEMPT (it's advance payment for exempt transport). Monthly/daily passes: EXEMPT. WHY EXEMPT: Metro is public transport — same logic as bus service exemption. Metro fare is already subsidized by government — adding GST would increase cost. METRO CONSTRUCTION: Metro construction contracts (civil works): 12% GST (works contract to government entity). Signaling systems: 18%. Rolling stock (metro coaches): 5% (rail coaches). Electrical systems (overhead electrification): 18%. Track materials (rails, sleepers): 18%. Tunnel boring: 12% (works contract to govt). Station construction: 12% (works contract to govt). METRO RAIL CORPORATIONS: DMRC, BMRCL, CMRL, MMRCL: these are government entities. Receive works contract at 12% (concessional for govt). Pay 18% on consultancy, design, project management. ITC position: Metro corporations claim ITC on construction inputs — but output (tickets) is exempt → ITC reversal required under Rule 42/43. HUGE ITC BLOCKAGE: Metro corps build ₹10,000-50,000 crore projects. Pay ₹1,500-7,500 crore in GST on construction. Output (tickets) exempt → ITC blocked. This GST becomes PROJECT COST → funded by government grants/loans. REAL ESTATE DEVELOPMENT (TOD): Metro stations with commercial development: Rental income from shops at metro stations: 18% GST. Advertising revenue: 18% GST. Parking income: 18% GST. These outputs allow PARTIAL ITC claim on attributable inputs.

Railway Catering — IRCTC 5%

IRCTC CATERING: Food served on trains (pantry car): 5% GST (without ITC). Classified as 'restaurant service' — cooking and serving food on train = restaurant. Base kitchen (preparing food for loading on trains): 5% (part of catering supply chain). E-catering (food ordered online, delivered at station): 5%. Platform food stalls (operated by IRCTC licensee): 5%. JAN AHAAR (economy meals at station): 5%. Rajdhani/Shatabdi/Vande Bharat meals: included in ticket → 5% (composite with transport). RETIRING ROOMS / LOUNGE: Railway retiring rooms: 12% GST (hotel accommodation). Executive lounge at station: 18% GST (service). Dormitory: 12%. Pay-and-use toilet: exempt (sanitation service). VENDING MACHINES: Tea/coffee from machine: 5% (food/restaurant service). Packaged food from vending: 5% (if freshly prepared) or standard rate if pre-packaged branded. WATER: Packaged drinking water sold on trains: 18% (packaged water — HSN 2201). Tap/filtered water: exempt. Rail Neer (IRCTC brand): 18% (packaged). WHY IRCTC 5% NO ITC MATTERS: IRCTC pays 18% GST on: kitchen equipment, raw materials (many at 5-18%), packaging (18%), transport of food (5%), staff uniforms (12%), cleaning (18%). Cannot claim ITC → all embedded in food cost. Result: train food is perceived as expensive for quality. IRCTC revenue from catering: ₹1,000+ crore/year. GST paid (net of no ITC): significant cost.

Railway Equipment & Manufacturing — 5-28%

LOCOMOTIVES & COACHES: Diesel locomotives: 5% GST (HSN 8601). Electric locomotives: 5%. Metro coaches: 5%. Railway coaches (AC/non-AC): 5%. Wagons (freight): 5%. WHY 5% ON ROLLING STOCK: Railway modernization priority — low GST to support domestic manufacturing. Also: Indian Railways is BIGGEST buyer → keeping cost low reduces fare pressure. Vande Bharat coaches (ICF/Integral Coach Factory): 5%. BOGIES, WHEELS, AXLES: Wheel sets: 18%. Axles: 18%. Bogies: 18%. Couplers: 18%. These are parts/components — not the final coach. Coach = 5%, but components = 18% → inverted duty structure. SIGNALING & COMMUNICATION: Signal equipment: 18%. Electronic interlocking: 18%. Track circuits: 18%. KAVACH (Indian ATP system): 18%. Telecom equipment for railways: 18%. RAILS & TRACK: Rails (steel): 18% (steel product). Sleepers (concrete/steel): 18% or 28%. Fishplates, fasteners: 18%. Points and crossings (turnouts): 18%. Ballast (stone): 5% (natural stone). SPECIALIZED ITEMS: Pantograph: 18%. Overhead catenary wire (copper): 18%. Transformer (traction): 18%. Brake systems: 18%. Air conditioning units for coaches: 28%. Seats: 18%. Berths/fittings: 18%. GOVERNMENT PROCUREMENT: Indian Railways buys through RDSO specifications. Payment includes GST. Railway factories (ICF, RCF, RWF — now corporatized): inter-unit transfers may not attract GST. Sale to Indian Railways: 5% on final product (coaches), 18% on components.

High-Speed Rail, Dedicated Freight & PPP

BULLET TRAIN (MAHSR — Mumbai-Ahmedabad): Japan International Cooperation Agency (JICA) funded. Construction: 12% GST (works contract to government — NHSRCL). Shinkansen rolling stock imported from Japan: 5% IGST (rail coaches). Technology transfer fee: 18% (import of service). Consultancy (Japanese consultants): 18% (import of service under RCM). Civil construction (tunnels, viaducts): 12%. Station construction: 12%. TOTAL GST ON BULLET TRAIN PROJECT: Project cost: ₹1.08 lakh crore. Estimated GST component: ₹12,000-15,000 crore. ITC position: NHSRCL (government company) — output will be passenger tickets (5%) → massive ITC accumulation/blockage similar to metro. DEDICATED FREIGHT CORRIDOR (DFCCIL): Eastern & Western DFC: ₹81,000 crore project. Construction: 12% works contract. Track, signaling: 18%. Locomotives (imported): 5% IGST + customs. Operational revenue (freight): 5% → same ITC inversion. PPP IN RAILWAYS: Private train operators (IRCTC Tejas, proposed private trains): Operate under PPP model. Charge passengers: 5% GST (AC class). Pay Indian Railways: haulage charge (for using track) — 18% GST. Maintenance of rakes: 5% or 18% (dispute — MRO for rail vs general service). Station development (private): 18% on commercial exploitation. SAGARMALA/RAIL SAGAR (port-rail connectivity): Rail connectivity to ports: construction 12%. Port-rail freight: 5%. Container handling at rail terminals: 18%. STATION REDEVELOPMENT (IRSDC/RLDA): Commercial development at stations: 18% (lease rent). Retail space: 18%. Advertising: 18%. Hotel/hospitality: 12-18%. Revenue sharing with Railways: 18% (service).

Railways & Metro — GST Rate Table

Item	HSN/SAC	GST Rate	Notes
Passenger ticket (AC class)	SAC 9964	5%	Without ITC
Passenger ticket (sleeper & below)	SAC 9964	Exempt	Common man transport
Metro rail tickets	SAC 9964	Exempt	Public transport
Freight transport (rail)	SAC 9965	5%	Without ITC
Train catering (pantry car)	SAC 9963	5%	Restaurant service — no ITC
Platform ticket	SAC 9964	18%	Access service
Rail coaches / wagons	8601-8606	5%	Rolling stock
Railway signaling equipment	8530	18%	Electronics
Rails / track material	7302	18%	Steel products
Metro construction (govt works)	SAC 9954	12%	Works contract to govt
Station commercial rent	SAC 9972	18%	Revenue exploitation
Demurrage / wharfage	SAC 9967	18%	Penalty/storage

Frequently Asked Questions

Why are sleeper class tickets exempt but AC tickets taxed at 5% — and what about Vande Bharat?

RAILWAY TICKET GST — CLASS-BASED EXEMPTION: RATIONALE: Indian Railways carries 8+ billion passengers/year. 85%+ travel in unreserved/sleeper — low-income groups. Government exempted lower classes to keep rail travel affordable for masses. AC classes (1A, 2A, 3A, CC, EC): considered 'premium' — 5% GST applicable. HISTORY: Pre-GST: Railways charged 'service tax' on AC tickets (4.5% effective). Post-GST (July 2017): 5% on AC, exempt on non-AC. Net change for AC passengers: marginal increase (~0.5%). VANDE BHARAT TRAINS: Vande Bharat has TWO classes: Chair Car (CC): 5% GST. Executive Chair Car: 5% GST. No 'sleeper' class in Vande Bharat — so NO exempt category. ALL Vande Bharat passengers pay 5% GST. Ticket price: ₹1,500 CC → ₹75 GST. ₹2,800 EC → ₹140 GST. GARIB RATH (AC-3 economy): Despite name ('poor man') — it's AC → 5% GST. No exemption for 'cheap AC'. SEMI-HIGH SPEED (Gatimaan, Tejas): Same rule: AC class = 5%. No 'non-AC semi-high speed' exists. SUBURBAN RAILWAYS: Mumbai local trains: EXEMPT (all classes). Chennai MRTS: EXEMPT. Kolkata circular railway: EXEMPT. Monthly season tickets (suburban): EXEMPT. These are treated as 'public transport' — similar to bus exemption. KEY POINT: The exemption is NOT about the train type — it's about the CLASS. If Railways introduces 'non-AC Vande Bharat' (hypothetical): would be exempt. Current reality: all premium/semi-high speed trains are fully AC → all at 5%.

How does GST work on railway freight — and what about the 5% vs 12% choice for goods transport?

RAILWAY FREIGHT GST — DETAILED: BASIC FRAMEWORK: Indian Railways charges freight based on: commodity class × distance × weight. GST: 5% on total freight charges (without ITC). PRACTICAL EXAMPLE: Coal transport (Eastern Coalfields → power plant): Freight charge: ₹5,000/tonne (for 500 km). GST: 5% = ₹250/tonne. Total: ₹5,250/tonne. Power company pays ₹5,250 — can't claim ₹250 ITC (5% no-ITC scheme). But power company charges 18% on electricity? No — electricity is OUTSIDE GST. So coal freight GST = embedded cost in power generation. THE 5% vs 12% OPTION: GTA (Goods Transport Agency) — ROAD transport: Option 1: GTA pays 5% (no ITC). Option 2: GTA pays 12% (with ITC) — recipient also gets ITC. Option 3: Recipient pays under RCM (5% or 12%). RAILWAY FREIGHT: Railways don't have this option — flat 5% without ITC. Why? Railways is NOT classified as 'GTA'. It's 'transport of goods by rail' — separate entry in notification. No RCM on railway freight — Railways directly charges 5%. CONTAINER OPERATORS: CONCOR (Container Corporation of India): charges 5% on rail-leg. Also provides road-leg (multimodal): if combined invoice → 5% (principal supply is rail). If separate road invoice → GTA rules apply (5%/12%/RCM). Private operators (DP World, Adani): same — 5% on rail, GTA on road. ANCILLARY CHARGES — DIFFERENT RATE: Demurrage (wagon held beyond free time): 18%. Wharfage (goods stored at railway premises beyond free time): 18%. Siding charges (for private sidings): 18%. Crane/handling charges: 18%. Weighment charges: 18%. Loading/unloading: 18% (manpower supply). So: base freight = 5%, everything else = 18%. This creates invoice complexity for large shippers. EXEMPT GOODS: Newspaper transported by rail: EXEMPT freight. Agricultural produce (farmer to mandi): arguments for exemption but not explicitly notified for rail. Defence goods: exempt. Relief material (disaster): exempt (specific notification during calamities).

What is the GST impact on metro rail projects — and why do metro corporations face ITC blockage?

METRO ITC BLOCKAGE — THE ₹10,000 CRORE PROBLEM: THE ISSUE: Metro corporations (DMRC, BMRCL, CMRL, etc.) build ₹10,000-50,000 crore projects. During construction (5-10 years): pay 12-18% GST on all inputs (₹1,500-7,500 crore GST). After commissioning: earn revenue from tickets (EXEMPT from GST). RULE 42/43 — ITC REVERSAL: If output is exempt → ITC on inputs attributable to exempt output must be REVERSED. Metro ticket revenue = 70-80% of total revenue → 70-80% ITC must be reversed. CALCULATION (Delhi Metro example): Phase-4 cost: ₹24,000 crore. GST on construction: ~₹3,500 crore (12% average on civil + 18% on E&M). Revenue split: Tickets (exempt): 75%. Commercial (taxable): 25% (rent, ads, parking). ITC eligible: 25% of ₹3,500 crore = ₹875 crore. ITC reversed/blocked: 75% = ₹2,625 crore. This ₹2,625 crore becomes PROJECT COST — funded by government grant or debt. WHAT METRO CORPS CAN CLAIM ITC ON: Commercial rent at stations: 18% output → ITC attributable to commercial area: claimable. Advertising revenue: 18% → proportionate ITC. Parking: 18% → proportionate ITC. Consultancy services sold: 18% → ITC. STRATEGIES TO MAXIMIZE ITC: (1) Maximize commercial exploitation of stations (more taxable revenue = more ITC eligible). (2) Develop real estate around stations (TOD — Transit Oriented Development). (3) Lease naming rights of stations (₹100+ crore/year for DMRC). (4) Monetize data/footfall (advertising): 18% GST — fully ITC eligible. GOVERNMENT RESPONSE: Demand from metro corps: either (a) exempt construction inputs for metro, or (b) allow ITC refund for zero-rated-like treatment. Government: has NOT granted exemption. Reasoning: metro is state/city project — central government won't bear GST revenue loss. STATE FUNDING: States typically fund 50% of metro projects. The blocked ITC (₹2,000-3,000 crore per project) effectively = tax on infrastructure. Many metro projects face cost overruns — GST is 5-8% of total cost overrun attribution.

How does GST apply to private participation in railways — station development, private trains, and PPP models?

PRIVATE PARTICIPATION IN RAILWAYS — GST FRAMEWORK: (A) PRIVATE TRAIN OPERATIONS: IRCTC Tejas Express (Delhi-Lucknow, Mumbai-Ahmedabad): IRCTC operates as licensee of Indian Railways. Ticket revenue: 5% GST (AC class). Haulage charges paid to Railways (for using track, loco): 18% GST (service). IRCTC claims ITC on haulage (18%) against ticket output (5%) — INVERTED. Can claim refund of accumulated ITC (inverted duty refund). Catering on Tejas: 5% (restaurant service — IRCTC's own). Proposed full private trains (scrapped for now): same framework would apply. (B) STATION REDEVELOPMENT: Railway Land Development Authority (RLDA): leases railway land for commercial development. Lease premium: 18% GST (supply of right to use land/space). Annual lease rent: 18% GST. Developer builds commercial complex: pays 18% GST on construction. Revenue sharing (% of developer revenue to Railways): 18% GST. Retail operations at station: 18% GST. Hotel at station: 12% GST (accommodation). Food court: 5% GST (restaurant). EXAMPLE — New Delhi Station Redevelopment: Project cost: ₹6,000+ crore. Developer pays lease to RLDA: 18% GST. Builds commercial + transit space. Earns rent from tenants: 18% GST. Revenue share to Railways: 18% GST. Hotel: 12% GST. Overall: nearly all revenue streams taxable — ITC flows through. (C) RAIL FREIGHT TERMINALS (MMLP — Multi-Modal Logistics Park): Private operator builds and operates freight terminal. Container handling charges: 18% GST. Warehousing: 18% GST. Road transport (last mile): 5-12% (GTA). Rail freight (to/from terminal): 5% (railway). PPP operator's total ITC: 18% inputs — can offset against 18% service outputs. Rail-related output (5%): creates inversion on proportionate basis. (D) WAGON LEASING: Private companies lease wagons to Indian Railways: Leasing service: 18% GST. Manufacturing wagons (for leasing): 5% GST on wagon. INVERTED: Make wagon at 5%, lease at 18% → net payer to government. (E) TRACK MAINTENANCE CONTRACTS: Private companies maintaining railway track: Works contract (construction/maintenance of immovable — railway track): 18% GST. OR 12% if contract is with government entity (Central Railway is government). Ballast cleaning, rail renewal, bridge repair: 12% (to Railways) or 18% (to private rail operations like metro).

Railways & Metro GST — Freight, Passenger, Construction Compliance

Laabam.One handles railways & metro GST: freight 5% invoicing, passenger ticket multi-rate classification, IRCTC catering billing, metro construction 12% works contract, station commercial rent 18%, demurrage/wharfage separation, rolling stock 5% procurement, and ITC reversal calculations for metro corporations.

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