Rajdhani Express tickets to cost more – thanks to Service Tax
Railway Minister Lalu Prasad Yadav has been trying to attract passengers to the trains but the Finance Ministry is playing spoil sport. The Railway ministry has clarified that Rajdhani and Shatabdi Express fares will increase because of Service Tax on catering. Not that other trains are exempted from Service Tax. But you know the Rajdhani tickets include the cost of food and so the Service Tax on food is to be added to the ticket. If you choose to buy food in other trains, you will end up paying a little more as the caterer has to now pay Service Tax.
It all started like this. Outdoor caterer is defined in the Act as
“outdoor caterer” means a caterer engaged in providing services in connection with catering at a place other than his own but including a place provided by way of tenancy or otherwise by the person receiving such services;
Notification No. 19/2004 – Service Tax dated September 10, 2004 exempted taxable service provided by an outdoor caterer to a client in relation to catering service provided on a railway train by such caterer.
However this notification No. 19/2004 was rescinded by Notification No.2/2006 dated 1.3.2006 thereby making the Railway catering liable to Service Tax. And this had come into effect from 1.3.2006. Obviously the Railways were not paying Service Tax since then and has now clarified that Service Tax will be collected from the passengers.