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FIEO: Freight hike will impact cost of doing business
Oct '12
Mr M Rafeeque Ahmed, President, Federation of Indian Export Organisations (FIEO) while reacting to freight services on the railways which is set to increase by 3.7 per cent from October 1 and auxiliary services rendered at stations such as catering and parking will have to bear a far higher burden, of 12.36 per cent stated that it will add to the cost of doing business at a time when global market demand has shrunk sharply and consumers have become price sensitive. 

Further it will also impact the lean margins MSME export sector given the domestic compulsions of high interest rates/production costs. 
FIEO chief said that the Finance Ministry has decided to levy these service taxes after expiry of the earlier exemption till September 30 and freight transporters will have to pay around Rs 1,500 crore extra in the next six months of 2012-13.
According to the official notification, "since an abatement of 70 per cent has been permitted on freight for taxable commodities, service tax will be charged on 30 per cent of total freight, inclusive of all charges on goods". The service tax of 3.708 per cent will be inclusive of 12 per cent service tax on 30 per cent freight, education cess of two per cent on service tax and higher education cess of one per cent "In freight, commodities exempted from the levy include petroleum products and gases, agricultural produce and chemical manure". The net taxable earning for the railways over the next six months is around Rs 40,000 crore. 

Federation of Indian Export Organisations (FIEO)

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