Railway to take a hit on service tax.

The Finance Minister, Mr Pranab Mukherjee has imposed a 3 per cent service tax on all freight movement on the railways.

With the Railways anticipating Rs 62,489-crore revenue from freight movement in 2010-11, the Government is likely to mop up Rs 1,874.67 crore through this levy.

Mr Mukherjee had attempted to do this in the budget of July 2009. He had then provided an abatement of 70 per cent in August. Then, in September, he had reversed the decision.

“The exemption of service tax on ‘service provided in relation to transport of goods by rail’ is being withdrawn. The levy will come into effect from April 1, 2010,” explained the Finance Bill, 2010.

However, freight rates for goods movement by rail will become dearer only if the Railways decide to pass it on. When contacted, a top Indian Railways official said that the Railways may not be in a position to pass it on.

The Railway Ministry’s position on the issue has been that Railways is an arm of the Government. “The Government does not impose service tax on any other Ministry and Railways cannot be singled out,” an official source said.

A former Finance Minister has also said that the Government does not tax itself.

Meanwhile, with the oil marketing companies announcing a hike in the price of diesel by Rs 2.55 a litre, the Railways will have to take a hit on account of higher fuel bill. The additional amount that the Railways will have to shell out on account of this hike is about Rs 596.7 crore annually.

With an annual consumption of 2.35 billion litres, the Indian Railways is the single largest buyer of high speed diesel.

The Indian Railways’ will have to take an additional hit of almost Rs 2,500 crore next financial year on account of the service tax and diesel price hike. This will affect the Railways finances and largely wipe out the Rs 3,173 crore excess it has budgeted for 2010-11 — unless the Railways hikes the fares.

Meanwhile, with the oil marketing companies announcing a hike in the price of diesel by Rs 2.55 a litre, the Railways will have to take a hit on account of higher fuel bill. The additional amount that the Railways will have to shell out on account of this hike is about Rs 596.7 crore annually.

With an annual consumption of 2.35 billion litres, the Indian Railways is the single largest buyer of high speed diesel.

The Indian Railways’ will have to take an additional hit of almost Rs 2,500 crore next financial year on account of the service tax and diesel price hike. This will affect the Railways finances and largely wipe out the Rs 3,173 crore excess it has budgeted for 2010-11 — unless the Railways hikes the fares.

A former Finance Minister has also said that the Government does not tax itself.

Meanwhile, with the oil marketing companies announcing a hike in the price of diesel by Rs 2.55 a litre, the Railways will have to take a hit on account of higher fuel bill. The additional amount that the Railways will have to shell out on account of this hike is about Rs 596.7 crore annually.

With an annual consumption of 2.35 billion litres, the Indian Railways is the single largest buyer of high speed diesel.

The Indian Railways’ will have to take an additional hit of almost Rs 2,500 crore next financial year on account of the service tax and diesel price hike. This will affect the Railways finances and largely wipe out the Rs 3,173 crore excess it has budgeted for 2010-11 — unless the Railways hikes the fares.

Meanwhile, with the oil marketing companies announcing a hike in the price of diesel by Rs 2.55 a litre, the Railways will have to take a hit on account of higher fuel bill. The additional amount that the Railways will have to shell out on account of this hike is about Rs 596.7 crore annually.

With an annual consumption of 2.35 billion litres, the Indian Railways is the single largest buyer of high speed diesel.

The Indian Railways’ will have to take an additional hit of almost Rs 2,500 crore next financial year on account of the service tax and diesel price hike. This will affect the Railways finances and largely wipe out the Rs 3,173 crore excess it has budgeted for 2010-11 — unless the Railways hikes the fares.

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