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With Trinamool out of UPA, rail AC fares, freight rates to go up nearly 4% from Monday

Estimates show passengers would have to pay around Rs 150 cr more and freight transporters around Rs 1,500 cr extra in next 6 months of FY13

BS Reporter  |  New Delhi 

Fares for air-conditioned passenger services and freight services on the railways are set to increase by 3.7 per cent from October 1. Auxiliary services rendered at stations such as catering and parking will have to bear a far higher burden, of 12.36 per cent.

The finance ministry has decided to levy these service taxes after expiry of the earlier exemption till September 30. The exact impact figures are still unclear. Estimates show passengers would have to pay around Rs 150 crore more and freight transporters around Rs 1,500 crore extra in the next six months of 2012-13.

The service tax on these was first announced in the 2009-10 Budget but the enforcement repeatedly deferred because of opposition from the Trinamool Congress, till recently an important part of the ruling coalition and also in charge of the rail ministry. The levy decision was taken yesterday at a meeting between officiating Railway Minister C P Joshi and Finance Minister P Chidambaram.

Service tax on freight services and AC fares
burden on  auxiliary services at stations, such as catering and parking 
Petroleum products and gases, agricultural produce, chemical manure exempted from levy of service tax

According to the official notification, “Since an abatement of 70 per cent has been permitted on freight for taxable commodities, service tax will be charged on 30 per cent of total freight, inclusive of all charges on goods.” The service tax of 3.708 per cent will be inclusive of 12 per cent service tax on 30 per cent freight, education cess of two per cent on service tax and higher education cess of one per cent. Fares of AC first class, executive class, AC 2-tier, AC 3-tier and AC chair car will go up by 3.708 per cent from October 1 and a notification to this effect issued on Thursday, a senior rail ministry official said.

In freight, commodities exempted from the levy include petroleum products and gases, agricultural produce and chemical manure. The net taxable earning for the railways over the next six months is around Rs 40,000 crore.

The service tax will apply to tickets issued in advance for journeys to commence on or after the date of its implementation. In the case of tickets already issued excluding service tax, this will be recovered from the passenger by ticket examiners or booking offices. In the case of cancellation of tickets by passengers, service tax will not be refunded by the railways, the official said.

First Published: Fri, September 28 2012. 00:50 IST