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A passenger looks through the window of a train as he waits for electricity to be restored at a railway station in New Delhi July 31, 2012 [Representational Image].Reuters file

Purchasing rail tickets could soon become cheaper since the railways has announced that it will not collect service charge on online bookings until December 31. The Indian Railways Catering and Tourism Corporation (IRCTC), a subsidiary of the railways that handles online train ticket bookings, normally charges Rs 40 per ticket for AC class and Rs 20 per ticket for non-AC sleeper classes.

"In order to help passengers and incentives online payments, IRCTC Service charge has been waived off on booking of E-tickets and I-tickets from 23rd Nov 2016 to 31st Dec 2016," IRCTC said in an update on its website. The decision to waive off the service charge was taken on Tuesday evening. 

In a bid to encourage cashless transactions, the service fee will not be collected on bookings done between November 23 and December 31. After the government's announcement to demonetise denominations of Rs 500 and Rs 1,000, the railways wants to digitise the entire payment-receiving mechanism, IANS reported.

"We have suggested IRCTC either do away or substantially reduce the service charge as the Prime Minister wants that online transactions should not be expensive than over-the-top counter payments. They could expand their on-board catering business, which is more profitable and look at other avenues like setting up premium lounges at stations," a government official was quoted as saying by the Economic Times. 

About 33 percent of the revenue comes through the service charge collected through online ticket bookings. The railways registered revenues worth Rs 1,500 crore during the last financial year that ended in March 2016, of which Rs 540 crore was made through online ticket bookings.

In other news, the ministry of railways announced last week that it would continue to accept the old Rs 500 and Rs 1,000 denomination notes for services until November 24.