NEW DELHI: With the exit of Trinamool Congress from the UPA government, the finance ministry has decided to levy service tax on AC rail travel and freight services fares as a result of which fares of AC First Class, Executive Class, AC-2 tier, AC-3 tier, AC Chair Car will go up by 3.7 per cent from October 1.
This decision was taken at a meeting between Finance Minister P Chidambaram and Railway Minister CP Joshi.
In compliance of the provisions contained in Finance Bill 2012 and subsequent notifications issued by Ministry of Finance, the Service Tax in case of railway travel, which was exempted up to 30th September 2012, will be levied on the fare of passenger services in AC First Class, Executive Class, AC-2 tier Class, AC-3 tier class, AC Chair Car class, AC Economy class and First Class from October 1, 2012.
Since an abatement of 70 percent has been permitted on passenger services by Ministry of Finance, the Service Tax will be charged on 30 percent of total fare including reservation charge, development charge and super fast surcharge
Service charge will be levied on 30 percent of the total fare actually being paid by the passengers on concessional value tickets/PTO tickets etc.
The Service Tax will also apply to tickets issued in advance for journeys to commence on or after date of implementation of Service tax.
In the case of tickets already issued excluding service tax, the service tax on total fare including development charge, super fast surcharge, reservation fee, etc. date of implementation of Service Tax will be recovered either by TTEs in the train or by the Booking Offices before commencement of the journey by the passengers.
Commercial Inspectors and TIAs have been instructed to visit all important stations and ensure that service tax is levied on tickets issued as per the revised rates.
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