Travelling in air-conditioned stage carriers of the Kerala State Road Transport Corporation (KSRTC) and Kerala Urban Road Transport Corporation (KURTC) will turn costlier with the State transport utility deciding to collect six per cent service tax along with ticket charges.

“The Transport Department has notified the decision and we have received the order. Instructions have been given to upgrade the software and the service tax will be collected along with ticket charges as soon as it is completed,” Chairman and Managing Director, KSRTC, M.G. Rajamanickam told.

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The six per cent service tax to be collected is based on the directive of the Union Finance Ministry in accordance with the provisions of the Finance Act, 2016 will only marginally burden the commuters, the CMD pointed out.

An additional 90 paise has to be collected as service tax from JNNURM (Jawaharlal Nehru National Urban Renewal Mission) air-conditioned buses along with its minimum charge of Rs.15. In addition to the Rs.1,270 bus fare, the commuters will have to shelve out Rs.76 on the Thiruvananthapuram-Bengalaru sector where multi-axle Volvo and Scania buses ply.

The State transport utility will have to remit Rs.1.5 lakh daily as service tax and Rs.45 lakh monthly.

In the present financial situation, he said the KSRTC management cannot even think of paying the service tax directly from the income being generated.

The decision to collect service tax for those commuting in air-conditioned stage carriers is in the wake of the notice from the Tax Department to remit the service tax from June 2016. This follows the deletion of ‘service of transportation of passengers, with or without accompanied belongings’ from the negative entry list. But the non air-conditioned stage carriers are exempted from the service tax as per the Central Act.

Since 15 per cent service tax, including the Krishi Kalyan cess is applicable with effect from June 2016, 60 per cent abatement is available and hence 9 per cent of the 15 per cent cess is exempted, leaving the transport utility to collect the remaining 6 per cent.

The State’s request to the Union Department of Revenue to exempt the KSRTC from the purview of the service tax evoked no response. Following this, the matter was placed in the Cabinet and approved after the Finance Department agreed to the Transport Department’s note to collect six per cent service tax and to remit the arrear tax from June to the actual collection date.