Freight rate of cement, iron ore to go up by 5.7 per cent

Freight rates on certain goods like cement, iron ore and coal are going to rise by more than 5 per cent with service tax and busy season charge coming into force from October 1.

Railways will realise 3.708 per cent service tax and 2 per cent busy season surcharge on goods loading from October 1, said a senior Indian Railway Ministry official.

However, the 2 per cent busy season surcharge will not be levied on foodgrains, flours, pulses and chemical manures.

The busy season charge will remain in force from October 1 to March 31.

As far as service tax is concerned, according to a notification, transportation of petroleum products, foodgrains, pulses, jute, fruits and vegetables are exempted from it.

However, service tax on all other goods like iron ore, coal, cement would be levied at the rate of 3.708 per cent.

Service tax is 12.36 per cent but after adjustment of 70 per cent of this, it will effectively be 3.708 per cent on freight services.

Service tax on freight was announced in 2009-10 Union Budget but the Trinamool Congress, which had held the Railway Ministry, had objected it.