No service tax on rail fares, freight till September end

Passenger fares and freight charges will not go up immediately as the Finance Ministry on Monday issued a notification exempting the Indian railways from 12 per cent service tax for three months till September 30.

"Government has exempted the core services provided by the Indian Railways, namely transportation of goods and passengers, from the levy of service tax. The exemption will remain effective for a period of 3 months, up to September 30, 2012," said a finance ministry statement.

Last week, Railway Minister Mukul Roy had written to Prime Minister Manmohan Singh, who is now looking after the Finance portfolio, requesting him not to introduce service tax on passenger fare and freight traffic from July 1.

The Finance Ministry has moved to a new regime of Service Tax based on negative list from July 1, under which only 38 services are exempted from payment of the levy.