Service tax exemption withdrawn: Railway to pay Rs6,000 cr

Government today announced that Railways will no longer be exempted from service tax for transportation of goods, which is expected to drain a whopping Rs 6,000 crore from its coffers.
     
Appealing to the finance minister to reconsider the move, chairman of Railways expert committee Amit Mitra said this will imply that Railways will have to pay a service tax over Rs6,000 cr in 2010-11.
        
The Finance Ministry has proposed in the Finance Bill 2010 that the exemption from service tax, introduced last year, on service provided in relation to transport of goods by rail be withdrawn and the levy will come into effect from April 1 this year.

"While the central government has given Rs16,752 crore to railway as budgetary support in Plan allocation, it is in effect taking back Rs 6,000 cr," Mitra said.