Wednesday, June 27, 2012


AC, first class rail fares may rise from July


New Delhi: Railway passenger fares in all AC classes and first class may rise by 3.6% from July 1 as there are little indications that finance ministry would extend service tax exemption to railways beyond this month. 
    Highly-placed sources in the ministry conceded that the fare hike looks imminent as railways could ill-afford to absorb the additional burden of Rs 5,500 to Rs 6,000 crore given itsfinancialcondition. 
    The sources said railway minister Mukul Roy had written a letter to finance minister Pranab Mukherjee last week requesting exemption for railways from paying service tax, but the request has gone unheededsofar. 
    While the railway board is believed to be finalising the modalitiesfor increasein fares, they said a fresh request has been made by the board on Tuesday to the finance ministry for a review. 
    The hike would put an additional burden on travellers on AC classes. Fares in AC-I and AC-II was increased by about 20% in this year’s railbudget. 
    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 hasdecidedtoexclude freight charges and AC rail travel from the negative list, which gets service tax exemption. 
    With freight and passenger fares enjoying a 70% subsidy, the impact on the increase in freight charges and fares of First Class and AC-I, AC-II and AC-IIIwillbe 3.6%. 

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