Source: As worded by Indian Railways, Government of India
Cancellation and Refund of E- Tickets
 The electronic reservation slip cannot be cancelled at
any regular counter of the Railways. The electronic
reservation slip can only be cancelled online.
Cancellation Before Charting
 The passenger can cancel the E- Ticket before charting
by logging in his User ID and password on the irctc.co.in.
Cancellation is not possible through any other User ID
and password. Upon cancellation of ticket, IRCTC will
process the refund electronically and credit the amount
in same account which was used at the time of booking
of tickets.
Cancellation After Charting
For confirmed Tickets
The passengers will have to make an online request
through filing TDR. The claim will be processed by Zonal
Railways Claims Offices by Train Chart verification, Train
Running information etc., available with them and decide
admissibility of refund. On receipt from Railways, IRCTC
will refund the amount electronically to the passengers
account. The passenger is not required to approach any
railway counter for the purpose of cancellation.
Fully Wait Listed Tickets
-  Fully waitlisted tickets are those tickets in which on one
  PNR, all the passengers are on waitlist. Such PNRs are
  dropped from the reservation charts at the time of
  preparation of Final Train Charts and refund is credited
  to customer account automatically.
 
-  Such passengers are not required to send online request
  for cancellation. IRCTC will cancel such tickets after due
  verification and process refunds electronically.
  
-  On a PNR which has all the passengers on waiting list at
  the time of charting, the name of such waitlisted
  passengers will not appear in the charts and such
  passengers, if found travelling, will be treated as
  unauthorized and charged accordingly. However, on a
  PNR which has some passengers confirmed or RAC
  status and some on waiting list, all the names including
  those on waiting list will appear in chart.
Part confirm/RAC/Waiting List
  
 -  If on one PNR there is more than one passenger and at
  least one passenger is having confirmed/RAC status and
  rests are on waiting list, names of all the passengers
  booked on such PNR will appear in the chart.
  
-  A certificate can be obtained from the Ticket Checking
  staff in the train regarding non-travelling of wait-listed
  passengers on such tickets and refund can be obtained
  thereafter by sending online TDR request. Such request
  will be processed by Zonal Railway Claims Offices.
  
-  If all such passengers do not want to travel before chart
  preparation, online cancellation can be done as at
  present. However, after chart preparation, online request
  can be filed through TDR. Zonal Railways Claims Offices
  will process TDRs by verification from Train Reservation
  Charts and decide admissibility of refund amount. IRCTC
  will arrange the refund to customer's account on receipt
  from Railways as per extant refund rules.