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UPA still looks to Mamata for railway policy

UPA still looks to Mamata for railway policy
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The difference of opinion between the Trinamool Congress and the Congress on applying service tax on railway services has come as a relief to the users of railway services. As a result of these differences, the government has decided not to levy the proposed 12 per cent tax on passenger fares and freight till 30 September. The railways minister Mukul Roy belongs to the Trinamool Congress.

On Monday, a statement from the finance ministry said, 'The 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 three months, up to September 30, 2012.'

The new service tax regime came into effect from 1 July. Earlier, there was confusion over putting the railway services in the negative list of service tax, which could have exempted them from the tax. Roy had written to Prime Minister Manmohan Singh, expressing reservations about adding the extra burden on the railway users. He had requested Singh not to introduce service tax on passenger fare and freight traffic from 1 July.

The proposal to levy service tax on railway passenger travel and freight was introduced in the union budget for 2009-2010. But, it was held up due to the opposition by the then railway minister Mamata Banerjee. Since then, the exemption on service tax has been extended on quarterly basis.

Some time back, Roy had made a similar request for tax exemption to the former finance minister Pranab Mukherjee.

If the government had allowed this 12 per cent service tax on railways, then the  passenger fares in all AC classes and first class would have gone up by 3.6 per cent.
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