Railways asks GST Council to exempt internal supplies

Wants to be treated as a unified entity to avoid multiple registrations

Indian Railways has asked the Goods and Services Tax (GST) Council to treat it as a unified entity under the new indirect tax regime, so that it needs only a single registration. It also wants internal supplies to be exempted from taxes.

The demands, along with a number of issues raised by the railways, will be considered by the GST Council at a meeting on Sunday, when it reviews rates decided in the last two meetings.

Sources said Railway Minister Suresh Prabhu has spoken to Finance Minister Arun Jaitley, the chairman of the Council, regarding this. Railway officials are also likely to present their case before the GST Council on Sunday.

As of now, the railways will have to register each of its 17 zones or 73 divisions in all the states. They would also have to pay the integrated goods and services tax for moving its own products — coaches, tracks — for internal consumption from one state to another.

“We have requested the Council to consider us a unified entity for the whole of India,” said a senior railway official who did not want to be named.

He added, “An exemption should be made for the transfer of our own goods and materials. It is not logical that a train coach made in Alambagh, which we use internally, is again charged IGST in another state.”

Railways would also be in trouble if it had to submit an invoice for every ticket sold.

“Currently, we report ticketing on bulk. Under the GST, each ticket will have to be submitted as a separate invoice. This will create a huge technical and accounting problem for an entity as large as the Indian Railways,” the official added.

Both input and output services of the railways are also likely to become costly after the GST roll-out, for which the targeted date is July 1.

In 2016-17, passenger traffic of the railways increased by 1 per cent to 8,221 million from 8,151 million in 2015-16.

Under the GST, the rate of tax on the transport sector would be 5 per cent.

Non-air conditioned (AC) trains, including local and metro, were exempted from the GST. Those travelling in AC would have to cough up 5 per cent, up from the current 4.5 per cent.

The overall impact of the GST on the railways is yet to be calculated.  

Recently, the railways had appointed senior tax attorneys V Lakshmikumaran and V Sridharan as consultants to handhold it for the transition to the GST. They will also study the impact o the new indirect tax on the railways.

Both the consultants have worked with Infosys and also assisted in setting up the Goods and Services Tax Network.