New Delhi, June 24, 2017

In further relief to Indian Railways, the goods and services tax (GST) Council has exempted the carrier’s inter-state movement of rolling stock such as coaches and locomotives. This is in addition to tax exemption that the railways got earlier for inter-state movement for repair and maintenance.

The latest move will save the carrier from paying IGST when its rolling stock moves across state or from manufacturing units to zones. The railways has 17 zones and one zone will be representing the railways in each state as the principal officer. However, the railways plea to exempt depot-to-depot movement of material for own consumption has not been accepted till now. The railways procures materials such a track fittings at one location which are then distributed across various locations. Though, according to a railway official who did not want to be named, the discussions with the Council is on and hopefully the exemption will come through before the July 1 roll out of GST.

The railways has also requested the Council to rationalise GST on container cargo movement and bring it at par with that for the roadways. The freight charges of the railways are also set to go up by 50 basis points post-implementation of the GST. The services tax applicable on freight is 4.5% which is set at 5% under the GST. As reported by FE, the railways is also worried about the project costs as the tax incidence on work contracts is set to rise under the GST regime. The carrier will start the process of registering its zone from June 25 when the window for fresh registration opens. At present, those entities which were already registered are migrating. The railways is in the process of engaging a GST Suvidha Provider (GSP) which will upload the data on the GST Network. The GSP will acquire the data from the Centre for Railway Information System (CRIS) which is preparing the enterprise resource planning solution for the railways. CRIS, an autonomous body under the railway ministry, already has access to all data of the railways including passenger and freight.

The railways is also staring at an increased burden of administrative work as the GST regime sets in. Many significant segment of transactions, such as land rent and fibre optics passing under tracks, will have to be brought to invoice format as at present they are executed through agreements and paid through cheques.

[The Financial Express]