As per the Finance Bill 2010 and subsequent Gazette notification No. 43 of 2012 on the subject, Service Tax on “Service provided in relation to transport of goods by Rail’ will come into effect from 1st October 2012”.
1)Certain commodities like Petroleum products and Gases, Cotton and Other Textiles, Fodder and Husk, Food grains, Flours and Pulses, Fruits and Vegetables, Groceries, Jute, Oil Cakes and Seeds, Spices, Sugarcane and Bagasse, Chemical Manures have been exempted from levy of service tax.
2)Since an abatement of 70% has been permitted on freight for the taxable commodities, Service Tax will be charged on 30% of total freight inclusive of all charges on goods which will be as follows:-
i)Service Tax of 12 % will be charged on 30% of freight (equivalent to 3.6% onthe total freight)
ii)Education Cess of 2% on Service Tax will be added (equivalent to 0.072% on total freight)
iii)Higher Education Cess of 1% on Service Tax will also be added (equivalent to 0.036% on total freight)
iv)Total Service Tax implication will be (i) + (ii) + (iii) = 3.0708% on the total freight.
3)Service Tax will be collected at the time of preparation of Railway Receipt itself. Similarly, as regards ‘To pay’ Railway Receipts, Service Tax will be collected at the time of delivery of goods. These charges will be collected from 01st October 2012. Service Tax will be levied on the total freight as reflected in the Railway Receipt.