The Union Finance Ministries Tax Research Unit (TRU) issued three circulars on Wednesday with several explanations and clarifications on the GST collection.

While they did discuss a lot, one of the notices talked about what GST would be levied in the event of a default, stating that in the event of a cancellation of a hotel or trip or even GST, there is a responsibility to pay GST on entertainment bookings.

This only applies if a cancellation fee is charged upon cancellation of the service. This is because fees are considered the cost of serving that person and the cost involved in cancelling the supply. Therefore, all of these are considered considerations for committed supply.

For example, if a person booked an AC first class ticket on the train, they are responsible for paying 5% GST. If they proceed to cancel the ticket, a fee of Rs 240 will be charged. In this case, they also have to pay 5% GST for the cancellation fee of Rs 240. This means they must pay an additional Rs 12 for the amount already paid. This is the case where a cancellation fee is charged.

In some cases, the seller collects a deposit from the buyer for a transaction, such as a property sale. GST does not apply because the deposit has been forfeited, and no GST applies to the buyer as the forfeiture is compensation for losses suffered, Not considered.