The railways department has clarified that the announced service tax on AC train travel would not be charged from passengers who have booked their tickets before October 1.

Previously, the railways had declared that service tax would apply to tickets booked in advance for travel to start on or after October 1. But the railways, in consultation with the union finance ministry, withdrew that order after a public outcry.

Confirming the withdrawal of the previous order, a spokesperson for the railways said, "Service tax will not be levied on tickets issued prior to October 1, and it would not be collected on board.”

The spokesperson explained that service tax would be collected on the tickets issued on or after October 1 as the tax would be levied from that date. The official added that if a person cancels his/her ticket booked on or after October 1, then the refundable amount would include service tax.

With service tax taking effect from October 1, fares of all AC classes will jump by 3.7 per cent from that date.

As per finance ministry’s estimates, service tax on passenger fare and freight tariff will generate additional Rs 300 crore and Rs 3,000 crore, respectively, for the government.

Separately, an unknown railways official said the government might revise fares in general class anytime in the near future. It may be noted here that general class rail fares have not been revised for around eight years, mainly due to opposition from the government’s own allies such as Trinamool Congress, which withdrew support to the government on the issue of FDI in retail and reduction in fuel subsidies.