Come July 1, Railway freight users may have to fork out service tax as the Finance Ministry is unlikely to extend an existing exemption from such a tax beyond that date.
This will be more so given that the Centre has decided to usher in the concept of negative list for services taxation from July 1.
There is no proposal as on date for again deferring the implementation of service tax for rail freight, Mr S.K. Goel, Chairman of the Central Board of Excise and Customs (CBEC), told reporters on the sidelines of a conference on budgetary changes on service tax here.
He said that any service tax on railway freight would not fuel inflation as the freight users can avail themselves of Cenvat credit.
On its part, the Railways have started gearing themselves up internally for implementation of service tax on rail freight, it is learnt. Earlier this month, the Railways had increased their parcel rates by 25 per cent.
Since April 2010, the Finance Ministry has deferred the implementation of service tax on rail freight by seven times.
Meanwhile, Mr Goel said that the negative list approach to services taxation should not be seen as a revenue-raising effort, but as an administrative step towards implementation of goods and services tax system.
Currently, the Centre is adopting a positive list approach for taxation of services wherein 119 specified services attract service tax.
He also said that the CBEC would soon issue simplified procedure for refund of service tax for exporters.
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