To provide a push for public transportation to rural areas, the Union Ministry of Road Transportation and Highways has favoured reimbursing the toll-tax paid by the State Road Transport Undertakings (SRTUs).
The reimbursement will be done only if these State-owned bus undertakings use the amount exclusively for buying buses to serve the rural sector.
Every year, the SRTUs together pay about Rs 625 crore as toll-tax. With this amount about 3,400 buses can be purchased.
The toll tax paid by the SRTUs accrue to National Highways, or the State Governments.
This proposal has been recommended by the Road Transport Ministry, pointing out that most of these SRTUs serve rural areas, which are unprofitable routes. To implement this proposal, a nod from the Finance Ministry is required.
Out of 5.93 lakh inhabited villages in India, only about a third are connected by organised SRTUs. All SRTUs together own 1.47 lakh buses (March 2011), from which 81 per cent are engaged in rural and inter-city operations.
The SRTUs pay annual toll-tax ranging from Rs 1 crore to Rs 80 crore a year, depending on the daily operations, according to the Government data.
OTHER INCENTIVES
The Ministry wishes to keep the State-owned bus providers out of the income-tax ambit. The SRTUs have come under the income-tax ambit since the start of fiscal 2008-09.
The Ministry has also supported fiscal incentives that should be targeted for buses purchased by the SRTUs given that 20-25 per cent of bus costs are due to taxes and duties of the State and Central Governments.
Another fiscal incentive that the Ministry supports for improving bus connectivity to rural areas is linked to making diesel costs lower through fiscal concessions.
Fuel costs account for 32 per cent of the operating cost of the SRTUs, and they use 3.2 billion litres of diesel annually.
The SRTUs could receive 50 per cent rebate on excise/VAT/sales tax. However, calls on these issues also need the State Government's support.