Government hikes taxes on railway fares

Days after the exit of the Trinamool Congress, the government Thursday hiked taxes on railway passenger fares and freight, which would increase by 3.7 percent from Oct 1.

Six months after the Trinamool Congress forced roll back in railway fare hike, the finance ministry imposed 3.7 percent service tax on freight charges and on AC and first class passenger fares.

Fares of AC first class, executive class, AC-two tier, AC-three tier, AC chair car, AC economy class and first class would go up by 3.708 per cent from Oct 1, a statement said.

The tax will apply to tickets issued in advance. Travelling ticket checkers will recover the service tax from passengers on the train or by the booking office before the train starts off.

In the case of cancellation of tickets, the service tax amount will not be refunded by the railways, a statement said.

On concessional tickets, service charges of 30 percent will be charged on the fare being paid by the passenger.

With regard to freight charges, a 3.7 percent service tax has been charged by the ministry.

However, certain commodities have been exempted from payment of service tax, which can be ascertained from the Indian Railways' web site i.e. www.indianrailways.gov.in, the statement said.

"The amount of Service Tax collected from passengers will be deposited with the Ministry of Finance as per procedure. Finance Departments of Zonal Railways have been instructed for proper accountal and remittance of Service Tax amount to the Government," the notification said.

The Trinamool, which held the railways portfolio since 2009 till it quit the UPA government last week, had steadfastly refused to allow hike in fares. Trinamool's Dinesh Trivedi, who became railway minister after party chief Mamata Banerjee became chief minister of West Bengal, had
proposed a hike in his railway budget. However, Banerjee got him replaced by Mukul Roy and the much-needed fare hike rolled back.