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Levy of service tax on transportation of passengers by rail

In terms of Board's letter of even no. dated 26.06.2012 service tax of 3.708% is levied on the total fare. As per General Budget 2015-16 announcement, the 'Education Cess' and 'Secondary & Higher Education Cess' shall be subsumed in the new service tax rate and service tax rate is proposed to be increased from 12% plus Education Cesses to 14%. Accordingly, it is proposed to modify para 3 of Board's letter of even no. dated 26.06.2012 as under:

GOVERNMENT OF INDIA

MINISTRY OF RAILWAYS

(RAILWAY BOARD)
*****

(Commercial Circular No. 32 of 2015)

No. TCII/2910/2012/Service Tax New Delhi Dated- 26.05.2015

The General Managers, All Zonal Railways.

Sub: Levy of service tax on transportation of passengers by rail.

Ref.:- Board’s letters of even no. dated 26.06.2012, 26.09.2013(C.C. No.58 of 2012), 28.09.2012 (C.C. No.59 of 2012), 29.09.2012 (C.C.No.60 of 2012) & 10.10.2012 (C.C. No.62 of 2012).

In terms of Board’s letter of even no. dated 26.06.2012 service tax of 3.708% is levied on the total fare. As per General Budget 2015-16 announcement, the ‘Education Cess’ and ‘Secondary & Higher Education Cess’ shall be subsumed in the new service tax rate and service tax rate is proposed to be increased from 12% plus Education Cesses to 14%. Accordingly, it is proposed to modify para 3 of Board’s letter of even no. dated 26.06.2012 as under:-

“Service tax of 14% will be charged on 30% of passenger fare equivalent to 4.2% of the total fare in first Class and AC Classes.

2. The increase in Service Tax will be applicable w.e.f. 01.06.2015 on the tickets issued/bookings made on or after 01.06.2015. Service Tax increase is not leviable on tickets issued prior to 01.06.2015.

3. Besides this, there is also a proposal to levy Swach Bharat Cess on all or certain taxable services at a rate of 2% on the value of such taxable services. If Railways is also included in the list for Swach Bharat cess, the same will be notified later.

4. Other terms and conditions will remain the same as per various circulars/notifications issued on this subject. Necessary instructions may be issued to all concerned.

5. This issues with the concurrence of Finance Directorate of Ministry of Railways.

(Dr. S. K. Ahirwar)
Director Traffic Commercial (G)
Railway Board

Categories: Service Tax
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