The Hindu Business Line : TDS on Rly staff perks -- Ministry seeks PMO nod for partial rollback

THE Finance Ministry is set to seek the clearance of the Prime Minister's Office (PMO) to partially roll back its decision to deduct tax at source on the perks given to railway employees in the form of free railway passes and Privilege Ticket Orders (PTOs).

The Ministry has proposed exempting one railway pass and two PTOs from tax as against the Railway Ministry's demand to withdraw TDS on the value of all free passes and PTOs.

While employees in Group A and Group B are entitled to six free passes and 12 PTOs in AC 11 Tier, those in Group C are entitled to 3 free passes and six PTOs in AC 11 Tier. Employees in Group D can avail of one free pass and two PTOs in Second Class.

According to official sources, the decision to tax perks of railway employees from April 1 was based on a directive from the PMO. The PMO, the sources said, made it clear that Railway employees cannot be treated differently from other employees.

Back of the book calculations indicate that the Finance Ministry would stand to lose around Rs 320 crore if no tax is deducted at source on the value of all free passes and PTOs, which railway employees are entitled to.

The Railway Ministry, which has stepped up pressure for a full rollback, contends that the give-away works out to around Rs 250 crore.

The demand made by the 16 lakh employees was endorsed on Tuesday by the Railway Minister, Mr Nitish Kumar, who held that such concessions were justified to motivate employees.

Mr Kumar said he had already taken up the issue of excluding free passes and PTOs from the tax net with the Finance Minister.

"I have already spoken to the Finance Minister and his response is quite positive. I will try my best to protect the interests of the Railway employees," Mr Kumar told reporters here.

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