Under pressure from Railway Minister Mamata Banerjee and concerned over rising inflation, the government has once again deferred a decision on levying service tax on transport of goods by rail to July 1. This is the fourth time that the government is postponing a decision on service tax on rail freight which was to be implemented from April 1, 2010.

“The service tax on rail freight was to be implemented from April 1. We have deferred it by three months,” a finance ministry official told PTI.

A formal notification in this regard would be issued this week, the official added.

In Budget 2009-10, the government had proposed 10 per cent service tax on goods carried by the Railways, to provide a level-playing field to transport of goods by road.

It, however, exempted rail freight from service tax in September 2009.

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