Prime Minister Manmohan Singh,currently holding charge of the finance ministry,has called for statistical details on the various services provided by Indian Railways that will be collected by the revenue department. Earlier,Singh had exempted the railways from paying taxes on goods and freight for an additional 3 months.
The Prime Ministers Office (PMO) has sought details on the total value of services provided by the Railways in both freight and goods categories,the inputs used by the railways and their value,input services used,and the taxable services provided by it, sources told The Indian Express.
The sources said that the revenue department has already written a letter to the railway ministry,seeking the details asked for by the PMO,and a reply is awaited. Once they give us the data,we will study and analyse it… this has to be done before the exemption period expires, the sources added.
When contacted,a railway ministry official said that they are working on the issue but maintained that since railways is an essential service,it should be exempted from service tax.
Earlier,in a bid to appease ally Trinamool Congress,the Prime Minister had yielded to railway minister Mukul Roys demand of not introducing service tax on passenger fares and freight traffic from July 1. The exemption,as the finance ministry maintains,was provided because the railway ministry had sought more time to upgrade its accounting system to avail of Cenvat credit.
The demand by the PMO may further delay the implementation of the levy on the Indian railways,the revenue department fears.
Service tax on passenger fares and freight was introduced in the Budget for 2009-10 but was kept on hold due to stiff opposition from the then railway minister Mamata Banerjee. The exemption has been extended since then every quarter.
Further,though only core services were exempt for three months from the service tax but the railways has not been paying tax on even auxiliary services like parking and advertisement space.
Former finance minister Pranab Mukherjee paid no heed to the railways demands for exemption from service tax. The 12 per cent service tax,if implemented would have raised passenger fares in airconditioned classes by 3.6 per cent.