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The implementation of service tax levy on transport of goods by rail has been deferred, once again.
The levy will now come into effect from January 1 next year as against the earlier announced date of July 1.
This is the fifth time that the implementation of this levy has been deferred.
Given the high inflation situation in the economy, it is being felt that any service tax levy on rail freight would adversely impact domestic industry, especially cement and steel manufacturers.
Such companies would have ended up paying more for rail movement of their inputs such as coal and also for their finished products.
Even after the service tax levy on railway freight comes into effect from January 1 next year, rail movement of pulses, foodgrains, petroleum products for the public distribution system, organic and chemical manure and motor vehicles would be exempted from the levy. The 70 per cent abatement norm too would now come into force from January 1, 2012.
The Finance Minister, Mr Pranab Mukherjee, had in Budget 2010-11 brought transport of goods by rail under the service tax net from April 1, 2010. The Government was looking to mop up about Rs 1,000 crore in 2010-11 from this levy.
Now, this levy is to be implemented 21 months after the originally planned date of introduction of April 1, 2010.
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