Friday, September 28, 2012


on Friday, September 28, 2012

In compliance of the provisions contained in Finance Bill 2010 and subsequent notifications issued by Ministry of Finance, the Service Tax in case of transportation of goods by rail, which was exempted upto 30th September 2012, would now be levied on total freight charges with effect from 1st October 2012.

Since an abatement of 70% has been permitted on freight for the taxable commodities by the Ministry of Finance, the Service Tax will be charged on 30% of the total chargeable freight inclusive of all charges (like busy season charges, development charge etc.,) would be calculated as follows:-

(i) Service Tax of 12% will be charged on 30% of freight (equivalent to 3.6% on the total freight charges)

(ii) Education Cess of 2% on Service Tax will be added (equivalent to 0.072% on total freight) and

(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)=3.708% on the total freight charges.

Certain commodities have been exempted from payment of service tax as per Ministry of Finance notification. The list of such commodities and further details on the modalities of levy and collection of Service Tax on transportation of goods by rail, may be ascertained from Indian Railways' web site i.e.

The amount of Service Tax collected by Railways would be deposited with the Ministry of Finance as per prescribed procedure.

List of Goods Exempted from Service tax On freight through rail.

Download Complete circular of Railway regarding Service tax on freight 

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  1. Can anyone take the cenvet credit of the service tax paid to railways

  2. Yes. As it is an input services.

  3. whether rail freight paid to a transport agency by a company is liable to service tax under Reverse Charge Mechanism???

    1. No, only goods transport company is covered.

  4. Sir,
    Our company SPMCIl(Kolkata) send goods to Noida through an agency Conatiner Corporation of India Ltd. Container Corporation of India transports the goods by carriages(vehicles) up to rail station and then by rail to Noida and charges freight on per container basis. Whether the freight charged by Container Corporation of India is covered under Reverse Charge as GTA service?? If not under what service it shall be covered and what shall be our(SPMCIL) liability under Finance Act,2012???