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Roll-back Service-tax on public transport

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What is Service Tax?
Service tax refers to tax collected by the government of India from certain service providers for providing certain services. The person who pays service tax can be either a service provider or a service receiver or any other person who is responsible for providing certain services. 

Service tax is a kind of indirect tax because the service providers pay the tax and recovers it from the service receivers who receive or purchase the taxable services. It is a kind of tax that you pay to the government for enjoying different services received from various service providers.

Recently, the Government of India decided to bring all state-owned transport corporations such as KSRTC, MSRTC, APSRTC, TNSTC, DTC, BMTC, GSRTC, UPSRTC, etc.under this service tax bracket in order to expand its tax Base.

At present, 55 SRTUs are operating in India, this includes 37 corporations, 10 municipal bodies and eight government organizations.

According to notification, a service tax of 15% is applicable on 40% of all revenues collected from AC bus services. This works out to roughly a 6% increase in ticket fares.

The reasons I’m opposed to this tax are:

Bus based public transport is the backbone of the country. The need is to move people across India in a very economical and efficient manner to reach every nook and corner of the country.

It must be recognized that the transport systems such as Railways or state-owned Govt. buses, provides transportation to the aam aadmi; it is indisputably the lifeline of our country. Therefore, the concept of levying service tax on such a service does not seem logical.

This move is just going to put more cars back on the road and add to the congestion. Prices would shoot up again once Goods and Service tax (GST) completely implemented. 

When we are talking about services ,look at the horrendous conditions of Volvo buses for some air-conditioners doesn’t work or during heavy-traffic AC struggle to work.

Only out of 55 state road transport undertakings (SRTUs) are making profit. So, when the SRTUs itself is in need of financial assistance, how can it pay service tax?

Passing on the service tax to passengers is not an option because it will be a burden on them. Today it is AC buses, tomorrow it could be extended to non-AC services.

Fact is the average tax-paying urban Indian routinely contends with power cuts, water shortages, bad roads, poor security and appalling public health services after paying regular tax and again Govt. such move going to hit those average middle-class tax-payer.

On the whole, I think this Additional Tax needs to be rolled back. It’s a bad idea to tax the Middle Class more. The upper class doesn’t take the bus, the lower class doesn’t take an AC bus. As always, increasing the Tax Base comes and burns the Middle Class pocket.

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