Railways to hike AC class fares by 0.5% from June 1

Railways to hike AC class fares by 0.5% from June 1

New Delhi:  Fares for first class and AC class in passenger trains besides freight charges will be increased by 0.5 per cent from June 1 as new service tax will come into effect.

“Currently, 3.708 per cent service tax is levied on train fares for AC Class, First Class and freight. This will go up to 4.2 per cent from June which means the rise is only 0.5 per cent,” said a senior Railway Ministry official.

If the AC fare is Rs 1,000, then you will be charged Rs 10 more. Increase in service tax will be applicable on tickets purchased on June 1 and onwards, he added.

While the increase in passenger fare is applicable on AC and First Class only, service tax will be levied on all goods transported by Railways.

The official said the hike is marginal and it is being done as per the General Budget proposals.

Season Ticket fares also to increase

First class suburban fares in the season ticket category may increase along with marginal hike in higher classes of the long distance train travel due to proposal in the union budget 2015-16 to make a upward revision in service tax to 14 per cent.

The new fares with service tax will become applicable from June 1, 2015. As of now the service tax is 12.36 per cent but railways are entitled to abetment of 70 per cent on passenger fare. The service tax applicable now for higher class of travel, except general and sleeper class, is 3.708 per cent.

A railway official said, ” At 14 per cent service tax, railways after deducting the 70 per cent exemption, will charge 4.2 per cent only, which includes education and higher education cess.”

The revised fare will not be applicable to those who have already booked the ticket before June 1.

A senior railway official said, “As a result, the fare for season ticket may increase by minimum of Rs 5 and maximum of Rs 10 for 60 km travel by first class.”

The service tax will be applicable to AC first class, executive class, AC-2 tier class, Ac-3 tier class, AC chair car class, AC economy class apart from First class.

The fares of Mumbai Central-New Delhi Rajdhani express would increase by Rs 10 for 3-tier AC and Rs 15 for 2-tier AC.”

Premium train tickets to not have dynamic fare

Due to high ticket pricing in premium trains, Indian Railways has decided to rationalize the dynamic fare system by starting a slab system. It will allow people to book premium train tickets from reservation counters and providing a window of 30 days for advance booking instead of 10 day at present.

Premium trains come with dynamic pricing where price of the ticket is linked with demand.

Premium trains were introduced to accommodate plans of last minute travellers. The trains were launched during the fag end of UPA regime by the then railway minister Malikarjun Kharge.

But it has been observed that prices sky rocketed with increase in demand and at times fare of 3AC was more than 2AC. Ministry, therefore, has decided to do away with the demand based pricing and have a slab system, whereby, fare will remain same for a particular number of seats despite increase in demand. The facility will be available from July 1.

Besides, premium trains will now be called Suvidha express.