In compliance of the provisions contained in Finance Bill 2010 and subsequent notifications issued by Ministry of Finance, the Service Tax in case of transportation of goods by rail, which was exempted upto 30th September 2012, would now be levied on total freight charges with effect from 1st October 2012.

Service tax on passenger travel and freight was introduced in the general budget for 2009-10, but was kept on hold due to the then Railway Minister Mamata Banerjee’s opposition. The exemption has been extended since then on quarterly basis but this time the Finance Ministry has decided to exclude freight charges and AC rail travel from the negative list, which gets service tax exemption.

Close on the heels of railways increasing parcel rates by 25 per cent, the freight charges will go up by about 3.6 per cent from July 1 with imposition of service tax. The government had given service tax exemption on goods carried by railways till June 30, 2012. From July 1 using railways to transport goods will come under service tax net.

Notification No.57/2010-Service Tax,  New Delhi, the 21st December, 2010 G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, [...]

Notification No.55/2010-Service Tax, New Delhi, the 21st December, 2010 G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby [...]

In what is seen as a bid to prevent further inflation spiral in the economy, the Finance Ministry has once again deferred the implementation of service tax levy on transport of goods by rail. The levy will now come into effect from January 1 next year.

Notification No. 09/2010-Service Tax, New Delhi, the 27th February, 2010. In the said notification, in the Table, against S.No.1 1 for the entry in column (3), the following entry shall be substituted, namely:- “Transport of goods by rail.” This notification shall come into force on the first day of April, 2010.

NOTIFICATION No. 29/2009 – Service Tax, Dated: August 31, 2009 In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the [...]

NOTIFICATION No. 28/2009 – Service Tax Dated: August 31, 2009 In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby [...]

4 new services has been brought in the tax net -a) Transport of goods through Water :- to any person, by any other person, in relation to transport of (i) coastal goods; (ii) goods through national waterway; or (iii) goods through inland water.