The hike is due to the implementation of a service tax levied in July under the Finance Bill 2012, which was held back by opposition from the Trinamool Congress. Originally the service tax, to be assessed on passenger fares in AC classes and freight, was scheduled at 12.36% but later reduced by 70% to 3.708%.
AC train fares will automatically include the newly imposed service tax on tickets purchased on or after October 1, 2012. Passengers traveling with tickets purchased prior to October 1 are subject to the collection of the service tax either by TTEs (Traveling Ticket Examiner) in the train or by the booking offices before departure.
Passengers seeking refunds for cancelled tickets on AC train fares will not be refunded the service tax.
AC train fares were already increased once before in 2012 when the Indian Railways’ annual budget took effect from April 1.
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