AC train fares, freight rate to go up from October 1

All AC train fares, freight tariff and cost of food at railway stations will go up from October 1 with the coming into force of service tax on them.

This follows a decision taken at a meeting between Railway Minister CP Joshi and Finance Minister P Chidambaram.

Fares of AC First Class, Executive Class, AC-2 tier, AC-3 tier, AC Chair Car will go up by 3.708 per cent from October 1 and a notification to this effect is being issued, a senior Railway Ministry official said.

Besides, the service tax will also be levied on freight and auxiliary service, he added. The service tax is 12.36 per cent but after the adjustment of 70 per cent of this, it will effectively be 3.708 per cent on passenger fares in AC classes and freight services.

However, auxiliary services rendered at stations like catering and parking will have to bear the burden of 12.36 per cent hike as there will be no adjustment on these services.

The decision comes days after the exit of Trinamool Congress (TMC) from the UPA government. TMC, which had held Railway Ministry portfolio, had objected to service tax being levied on these services.

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 per cent of the total fare. Passengers travelling 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.

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