The 10 wagon water train, which carried around around 2.5 million litres a trip to Latur, was not enough for the town.
After ferrying water to Maharashtra's Latur for a month, the railways has presented a bill of Rs 4 crore to the district collector. The railways claim they sent the bill following a request by the administration.
So far the trains have carried 62 million litres of water to Latur, perhaps the driest spot of parched Marathwada, around 300 km from Mumbai.
"It is up to the district administration whether to pay us or seek waiver," news agency Press Trust of India quoted S K Sood, General Manager of Central Railway, as saying.
Maharashtra government started sending water to Latur a month ago.
The first trip of the water train - named 'Jaldoot' -- took place on April 11. The train left the western Maharashtra and reached Latur a day later, covering a distance of around 342 km.
But the 10 wagon train, which carried around around 2.5 million litres a trip, was not enough for the town's half million population.
After nine trips, it was replaced with a 50 wagon train that carried water all the way from Rajasthan's Kota.
In January 2013 Maharashtra had first considered water trains for the driest regions of drought-hit Marathwada. Discussions were then held with the Railways to arrange wagons to transport 5 lakh litres of water a day.
Water levels in the 131 smaller dams in Latur depleted fast this year and the government was forced to start ferrying water by trains. The water is purified nearby and then carried by tankers to the rest of the district. But even so, locals say they have to queue up for hours to fill a couple of buckets.