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Current Affairs

IRCTC’s convenience fee

Date: 01 November 2021 Tags: Miscellaneous

Issue

The order of the government to share 50 per cent of IRCTC’s revenues collected from convenience fee from users was revoked.

 

Background

The order of the government resulted in the falling of the company’s share price by 29 percent.

 

Details

  • The convenience fee is a form of service fee collected by IRCTC from users for using their platform to book train or air travel tickets.

  • Train booking is the major source of the convenience fee. Till November 2016, a certain convenience fee was charged.

  • For non-air conditioned (AC) travel classes, IRCTC levied a service charge or convenience fee of Rs 20 plus tax and Rs 40 plus tax per ticket for air conditioned class tickets. 

  • The Ministry of Railways had withdrawn the convenience fee for a period of three years since 2016 for promoting digital transaction.

 

Restart of fees

  • The charges were imposed again in 2019. It included Rs 15 plus goods and services tax (GST) per ticket on booking of non-AC tickets, and Rs 30 plus GST for AC class tickets. 

  • IRCTC charges less fees for payments made through Bharat Interface for Money (BHIM) or Unified Payments Interface (UPI).

 

Impact of government directive

  • After IRCTC informed the stock exchanges that the Ministry of Railway had asked share in a 50-50 ratio of the revenues earned from the collection of convenience fee, a slump in share was witnessed.

  • Before the announcement, the IRCTC shares had ended at Rs 913.75. Post the announcement, IRCTC prices fell sharply by as much as 29 per cent to hit day’s low of Rs 650.10.

  • The Department of Investment and Public Asset Management decided to withdraw the directive after the sharp fall in share prices.

  • Post the reversal, the prices recovered sharply to trade at day’s high of Rs 906.60. At the end of the day, it fell to Rs 856.45, which is 6.2 per cent lower.