This circular provides clarification on the applicable GST rates for goods supplied to the Indian Railways, in view of representations received regarding incorrect application of the concessional 5% GST rate on certain supplies.

It has been clarified that only goods classifiable under Chapter 86 of the Customs Tariff, when supplied to the Indian Railways, are eligible for GST at the concessional rate of 5%, subject to the condition that no refund of unutilised input tax credit is admissible. This concessional rate flows from Notification No. 1/2017–Central Tax (Rate) read with Notification No. 5/2017–Central Tax (Rate), both dated 28 June 2017.

Goods supplied to the Indian Railways that are classifiable under chapters other than Chapter 86 do not qualify for the concessional rate. Such goods are required to be taxed at the normal applicable GST rates as prescribed under Notification No. 1/2017–Central Tax (Rate) or Notification No. 2/2017–Central Tax (Rate), as applicable, irrespective of the fact that the recipient is the Railways.

Accordingly, suppliers are required to determine the GST rate based strictly on the tariff classification of the goods and not merely on the nature of the recipient.