With the Trinamool Congress no longer holding the Railway Ministry,the government has decided to impose service tax on air-conditioned classes,raising the fares of AC classes by around 3.7 per cent from October 1.
The current exemption of service tax to AC fares,which expires on September 30,was granted when former Railway Minister Mukul Roy requested Prime Minister Manmohan Singh,who was holding the Finance portfolio following Pranab Mukherjees exit,for the same on the last day of June.
On Wednesday,Finance Minister P Chidambaram had a meeting with Railway Minister C P Joshi and the two decided not to continue with the exemption anymore.
Fares of AC First Class,Executive Class,AC-2 tier,AC-3 tier,AC Chair Car will go up by 3.708 per cent from October 1 and a notification to this effect has been issued. Besides,service tax will also be levied on freight and auxiliary service.