Get ready for price spiral: transport cost set to rise | Firstpost

The pinch of the increased diesel prices is getting harder. Media reports say the government is toying with the idea of increasing railway fares.

Already on Thursday, a meeting between Railway Minister CP Joshi and Finance Minister P Chidambaram had decided to levy service tax on AC classes and freight and auxiliary services.

According to a PTI report, the fares of AC first class, executive class, AC-2 tier, AC-3 tier, AC chair car will go up by 3.708 percent from 1 October. A notification to this effect is expected today.

Passengers traveling in AC classes were brought under service tax from July this year as per the Finance Bill 2012 but the levy had since been kept in abeyance because of opposition by the TMC. AFP

The service tax will apply to tickets issued in advance for journeys to commence on or after the date of its implementation. In case of tickets already issued excluding service tax, it will be ensured that the same is recovered either by TTEs in the train or by the booking offices before commencement of journey.

In case of cancellation of tickets by the passengers, service tax will not be refunded by railways, the official said.

On concessional tickets, service charges will be 30 percent of the total fare.
The service tax is 12.36 percent but after the abetment of 70 per cent it will be 3.708 percent on passenger fares in AC classes and freight.

Passengers traveling in AC classes were brought under service tax from July this year as per the Finance Bill 2012 but the levy had since been kept in abeyance because of opposition by the TMC.

Freight rate will also go up by 3.708 percent from October. However, auxiliary services rendered at stations like catering and parking will have to bear the burden of 12.36 percent as there will be no abetment on these services.

Service tax on freight was announced in 2009-10 Union Budget but then Railway Minister Mamata Banerjee had protested against the move.

With inputs from PTI

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Source: http://www.firstpost.com/economy/get-ready-for-price-spiral-transport-cost-set-to-rise-472466.html

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