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UPA’s post-Mamata gift: AC train fares hiked

When the Trinamool Congress pulled out of the United Progressive Alliance (UPA), it also let go of the railway ministry, which was headed by its leader Mukul Roy. The new minister C P Joshi, on Thursday, sought to overturn a bit of what Roy and his party stood for. He agreed to the finance ministry levying service tax on AC rail travel and freight services.

According to a statement released by the railway ministry on Thursday, fares of AC first class, executive class, AC-2 tier, AC-3 tier, AC chair car will go up by 3.7 per cent from 1 October. The decision for introducing this service tax on AC classes and freight and auxiliary services was decided  on Wednesday at a meeting between Joshi and the finance minister P Chidambaram.

The service tax will also apply to tickets issued in advance for journeys to commence on or after date of implementation of service tax. In the case of tickets already issued excluding service tax,  the service tax on total fare including development charge, superfast surcharge, reservation fee, etc. date of implementation of service tax will be recovered  either  by TTEs in the train or by the booking offices before commencement of the journey by the passengers, said an official statement.

The service tax on freight was announced in the 2009-10 union budget, but the then railway minister Mamata Banerjee had protested against this move. Soon after the Trinamool Congress let go off the railway ministry, the UPA decided to go ahead with the move.
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