Rail travel in first Class and Airconditioned coaches and transportation of Goods by Indian Railways has been exempted from 12 per cent Service Tax for three Months.

A Ministry of Finance notification issued on Monday said the Central Government, has on public interest exempted the two kinds of services provided by Indian Railways namely Service of transportation of passengers in 1st class or in Air Conditioned Coach and services by way of transportation of goods.

The two services will be exempted from the whole of service tax leviable and the exemption would be effective upto 30th September 2012.

The Minister of Railways, Mr. Mukul Roy, had taken up the issue with the Prime Minister Manmohan singh who is also looking after the Finance portfolio.

Mr. Roy had emphasized that the role performed by the Railways is primarily aimed at fostering inclusive growth through effective discharge of its social obligation.

The Finance Ministry has introduced a new regime of Service Tax based on negative list from July 1, under which only 38 services are exempted from payment of the levy.