Service tax should be shared with railways: Parliamentary panel

Panel also noted that the concessions given by the Railways on various categories should also be taken up with the ministries concerned

A Parliamentary Panel has suggested sharing with Railways the service tax paid on passenger fares on specified classes and freight which is collected by the Finance Ministry and pursuing the matter vigorously with the authorities concerned.

In its latest report, the Standing Committee on Railways has noted that service tax on specified classes of passenger and freight was to the tune of Rs 1478.10 crore and Rs 3449.34 crore during the financial years (FY) 2012-13 and 2013-14, respectively.

Though several requests have been made to the Finance Ministry for exemption from payment of service tax on freight and fare, these were not agreed by the Ministry, the report submitted to the Lok Sabha Speaker said.

The Committee, headed by TMC MP and former Railway Minister Dinesh Trivedi, has also noted that the concessions given by the Railways on various categories should also be taken up with the ministries concerned.

It also strongly favoured that the concessions given by the public transporter should be reimbursed to the Railways.

Taking note of the practice of payment of dividend by the Railways, the committee suggested to revisit the issue with Finance Ministry.

Observing that railway's internal generation was almost negligible, it said that the national transporter was dependent upon gross budgetary support which is a loan from general exchequer for their projects.

Furthermore, the panel noted that the Railways had to pay four per cent dividend to general revenues, which was about Rs 10,000 cr from their internal generation in FY 2015-16, thus severely restricting expenditure on creation of assets.

In addition to that the implementation of the 7th Pay Commission report will affect the railway's finances to a great extent.

The Committee, therefore, has recommended that the Railways and the Finance Ministry should revisit the issue of the practice of payment of dividend by Railways to the general revenues keeping in mind that no other department like Defence, Roadways pay any dividend on their budgetary grant.

The amount so saved could be utilised for railways infrastructural projects which are starved of funds for quite some time, the panel said.

Suggesting that railways should not only scrupulously adhere to financial discipline in various segments of their activity but also look for alternative ways to boost their resource generation which they could utilise for timely completion of projects so that these projects in return, start remunerating.