The passenger fares in all AC classes and first class of the train and rail freight tariff will go up from 1st of next month as government has decided to levy service tax on them. An official release said, since an abatement of 70 percent has been permitted on passenger and freight services by Ministry of Finance, the Service Tax will be charged on 30 percent of total passenger fare and 30 percent of total chargeable freight. The total Service Tax implication on the fares of such classes and on rail freight will be around 3.7 percent each.
On concessional tickets, service charges will be 30 percent of the total fare actually being paid by the passengers. This follows in compliance of the provisions contained in Finance Bill 2012 and subsequent notifications issued by Ministry of Finance in this regard.

The service tax will apply to tickets issued in advance for journeys to commence on or after the date of its implementation. In case of tickets already issued excluding service tax, it will be ensured that the same is recovered either by TTEs in the train or by the booking offices before commencement of journey. In case of refund of passenger fare, if any, refund of Service Tax shall be claimed by the passenger from the concerned Service Tax authority. No refund shall be made by the Railways on this account.