Details of service tax in railway AC/first class effective from today

Ahmedabad, 1 October 2012

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 upto 30th September 2012, will be levied on the fare of passenger services in the following classes from 1st October 2012.

(i) AC First Class, (ii) Executive Class, (iii) AC-2 tier Class, (iv) AC-3 tier class, (v) AC Chair Car class, (vi) AC Economy class and (vii) First Class.

Since an abatement of 70% has been permitted on passenger services by Ministry of Finance, the Service Tax will be charged on 30% of total fare including reservation charge, development charge, superfast surcharge which would be calculated as follows:-

i) Service Tax of 12% will be charged on 30% of fare (equivalent to 3.6% on the total fare)

ii) Education Cess of 2% on Service Tax will be added (equivalent to 0.072% on total fare) and

iii) Higher Education Cess of 1% on Service Tax will also be added (equivalent to 0.036% on total fare)

iv) Total Service Tax implication will be (i)+(ii)+(iii)=3.708% on the total fare.

On suburban section the services tax of 3.708% will be levied on First Class tickets and First Class Season Tickets from 1st October, 2012.

On Concessional value tickets etc. service charge will be levied on 30% of the total fare actually being paid by the passengers.

It is further clarified that the tickets booked before 1st October, 2012 for journeys on or after 1st October will not come under the ambit of service tax.