Against the backdrop of high inflation, the implementation of levy on railway freight service has been put off once again. The levy is now likely to come into force from April 1 instead of January 1 as announced earlier. This is the sixth time that the levy on transport of goods by rail has been deferred. Finance Minister Pranab Mukherjee in the 2010-11 Union Budget brought transport of goods by railway under the service tax net from April 1, 2010. However, the proposal was vehemently opposed by Railway Ministry fearing adverse impact on goods movement, forcing the government to defer it repeatedly. “It is being felt that any levy on freight service at this juncture would adversely impact the industry. Movement of coal and cement among others goods would become costlier with the imposition of service tax,” a senior Railway Ministry official said. The levy is now likely to be implemented from April 1.
Notification Related to Deferment of Service tax on Rail Freight are given below:-