This was something that the country’s largest employer had been reluctant to do ever Lalu Prasad took over as its boss. But the Indian Railways has now relented and has agreed to open services other than ticketing, that are offered by its various arms, to service tax.
The Central Railway and Western Railway are among the first to register for taxation, various service rendered under their arms.
According to officials, railways offer various service apart from tickets, which are currently out of the tax net. These include restaurants on the platform or on railway premises, book shops, brokers and jobbers (For railway scrap auctions, renting out land, etc), services operating from space let out by the railways, among others. The additional cost will be passed on and consumers may have to pay more for the food items bought in the railway platform or even shoes polished by a shoesmith using space rented from the railways. Tickets and railway freight are already under the service tax net.
Railways have been opposing the move to include non-ticketing and non-freight services till date.
However, the railways relented after the finance ministry agreed to amend Section 99 of Indian Railways Act to provide exemption to Indian Railways with respect to taxable services prior to July 1, 2012. In fact, budget 2013-14 specified that exemption will be granted to the extent show cause notices have been issued up to February 20, 2012.