Business Daily from THE HINDU group of publications
Wednesday, Jul 08, 2009
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Business Daily from THE HINDU group of publications Wednesday, Jul 08, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Railways Agri-Biz & Commodities - Commodities Industry & Economy - Taxation Web Extras - Budget Commodity prices may go up Our Bureau Bangalore, July 7 Prices of commodities moved by railways and waterways are expected to cost more, with the two being brought under the service tax net. But the increase in the rail freight rate would still be cheaper than the road sector, which had been paying service tax since 2005. In a statement on the rail freight being included for levying service tax , the Indian Foundation of Transport Research and Training (IFTRT) said though the normal service tax on railway freight would be 10 per cent and levy of education cess, the actual applicable rate, would only by 2.5 per cent. Like the road sector, which was given a 75 per cent abatement concession following its agitation against the levy, the Railways would also enjoy the concession. Freights such as fruits, vegetables, food grains and milk products are, however, totally exempted from the levy.
IFTRT said the 13th Finance Commission had recommended the parity of levy of service tax on all modes of transport moving freight. Levy of service tax on rail sector was to effect a level playing field, IFTRT said, adding that this could bridge the gap to an extend in the freight rates between rail and road. The freight transportation rate by roads has gone up by 5 to 6 per cent following the recent increase in the diesel price by Rs 2/litre. Despite higher freight rates, road transport enjoys a higher market share of 79 per cent with freight earnings of more than Rs 3 lakh crore. The Railways, with the remaining share, earns only Rs 40,000 crore. During the last fiscal, the road sector generated service tax revenue of Rs 2,840 crore due to the abatement concession. The Railways are expected to generate about Rs 1,000-1,200 crore from the applicable 2.5 per cent service tax. Railway falls in service tax net; details on abatement, exemption awaited More Stories on : Railways | Commodities | Shipping/Ports | Taxation | Budget
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