Title - Levy of Service Tax on Transportation of Goods by Rail from 1st October 2012

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 01stOctober 2012. Service Tax will be levied o­n the total freight as reflected in the Railway Receipt.