Railways wants review of service tax on container freights

As part of its plans to woo more private companies into the container business, the railway ministry has asked Central Board of Excise and Customs (CBEC) to rethink the policy on levying service tax on rail container freight.

As part of its plans to woo more private companies into the container business, the railway ministry has asked Central Board of Excise and Customs (CBEC) to rethink the policy on levying service tax on rail container freight. Announced in Budget 2006-07, a 12.24 per cent service tax is levied on 30 per cent of the freight carried by a rail container.

A similar service tax is then levied on the freight when it is carried by freight forwarders and the shipping lines. The entire tax burden at the end stands at 30.8 per cent which is billed to the customer.

However, Railways is of the view that this was leading to a loss business as road transporters are taxed for only 25 per cent of the freight carried by them. A Rail Bhawan official said, “We feel that the tax is making us uncompetitive vis-à-vis the road transport sector.”

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