Service Tax on AC Classes/First Class from tomorrow i.e. 1st October, 2012

Ministry of Railways 30-September, 2012

Levy of Service Tax on Railway Passengers Travelling in AC Classes/First Class from tomorrow i.e. 1st October 2012

No Service Tax to be Levied on Tickets Issued Prior to 1st October 2012 

In Case of Cancellation of Tickets Issued on or after 1st October 2012, the Applicable Amount Including Service Tax to be Refunded by Railways

In compliance of the provisions contained in Finance Bill 2012 and subsequent notifications issued by Ministry of Finance, the Service Tax in case of railway travel will be levied on the fare of passenger services in the following classes from tomorrow i.e. 1st October 2012:-

(i) AC First Class, (ii) Executive Class, (iii) AC-2 tier Class, (iv) AC-3 tier class, (v) AC Chair Car class, (vi) AC Economy class and (vii) First Class.

Since an abatement of 70%  has been permitted on passenger services by Ministry of Finance,  the Service Tax will be charged on 30% of total fare including reservation charge, development charge, superfast surcharge which would be calculated as follows:-
1. Service Tax of 12% will be charged on 30% of fare (equivalent to 3.6% on the total fare)
2. Education Cess of 2% on Service Tax will be added (equivalent to 0.072% on total fare) and
3. Higher Education Cess of 1% on Service Tax will also be added (equivalent to 0.036% on total fare)
4. Total Service Tax implication will be (i)+(ii)+(iii)=3.708% on the total fare.

   On Concessional value tickets, service charge will be levied @ 3.708% of the total fare actually being paid by the passengers.

          Through a subsequent corrigendum issued by M/o Railways,  it has been clarified that the Service Tax would be collected on the tickets issued/bookings made on or after 01.10.2012.  Service Tax is not livable on tickets issued prior to 01.10.2012 and hence will not be collected on board the trains.
In case of cancellation of tickets booked by the passengers on or after 01.10.2012, the applicable amount including refundable Service Tax amount will be refunded by Railways as per Railway refund rules and Finance Ministry guidelines.

The amount of Service Tax collected from passengers will be deposited with the Ministry of Finance as per prescribed procedure.  Finance Departments of Zonal Railways have been instructed for proper accountal and remittance of Service Tax amount to the Government.


PIB Release
(Release ID :88062)

Railway Board Order:


No.TCII/2910/2012/Service Tax

New Delhi dt. 29.09.2012
Commercial Circular No. 60 of 2012

The General Managers,

All Indian Railways

Subject: Procedure Order for Implementing Service Tax Refunds on Passenger
Fare Tickets Booked and Cancelled on or after 01.10.2012.

This refers to Commercial Circular No.59 of 2012 on the levy of service tax
on transportation of passengers by Rail in Air-conditioned classes and 1 AC
Class. The following has been stated therein:

In case of cancellation of tickets booked by the passengers on or after
01.10.2012, service tax can be refunded by Railways except for the portion of
service tax on the amount of cancellation charges retained by the Railways.

2.0 The following procedure shall be followed for the afore mentioned refund
of service tax:
i) Service tax will be leviable only on the cancellation/clerkage charges
retained by the Railways at the rate of 3.708% on the charges retained. The
remaining portion of service tax collected at the time of booking shall be
refunded along with the refundable fare portion.
ii) This will be applicable only to cancellation of AC Class/First Class
tickets booked by passengers on or after 01.10.2012.

3.0 As the changes in the PRS and UTS cancellation module and accounting
module will be made effective by 10th of October, 2012, the following manual
refund procedure shall be followed in the interim period, that is, between
01.10.2012 and 10.10.2012:-

i) In case of cancellation of AC class and First class tickets booked on or
after 01.10.2012, service tax to be refunded would be done manually by Railways
at the booking counters. In order to facilitate the refund process, the amount
to be refunded would be displayed through PRS on the cancellation form itself of
the PRS terminal.

ii) The accountal of the amount of service tax refunded manually shall
be maintained in a separate register. The details of service tax refunded shall
also be endorsed on the cancellation ticket by the booking deck.

iii) For cancellation of e-tickets including dropped waitlisted e-tickets,
IRCTC will refund the service tax to passengers from the e-ticketing front-end
application and account for the same with Railways. The details of the amount of
service tax to be refunded on the cancelled e-tickets would be sent by PRS to
IRCTC while cancelling the tickets and service tax should be refunded in the
same manner as refunds done for other cancelled tickets.

4.0    With effect from 10.10.2012, refund of service tax will be granted by the
system itself, through the PRS and the UTS cancellation and accounting modules.

Please note and notify accordingly.
A. Madhukumar Reddy
Executive Director, Passenger Marketing,
Railway Board
Source: www.indianrailways.gov.in


Commercial Circular No. 58 of 2012

ISSUED ON 26.09.2012

The General Managers,
All Indian Railways

No.TCII/2910/2012/Service Tax (.) Reference Ministry of Railways letters of even number dated 26.6.2012 and 05.07.2012 regarding levy of service tax on transportation of passengers by rail (.) It is hereby now advised that service tax on transportation of passengers by rail will be levied w.e.f. 01.10.2012 (.) Necessary instructions may be issued to all concerned, including PRSs, immediately (.) A Madhukumar Reddy / Railways (.)

(A Madhukumar Reddy) 
Executive Director Passenger Marketing 
Railway Board

Source: www.irctc.co.in

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