Service tax on road freight to favour rail

Transport companies said the Budget proposal to tax the sector by bringing the entire industry under service tax would make road transport less competitive against rail transport.

Competitors like Railways, postal department and inter-state buses which carry substantial amount of cargo had not been brought under the ambit of the tax. It would encourage tax evasion too as trucks would evade payment by not carrying consignment notes.

"An airline booking agent collects service charges on the commission amount and not on the whole of fare, whereas a goods transport booking agent is expected to pay service tax on the whole freight amount," Raja Roy, general secretary, Calcutta Transport Goods Association, complained.

The tax should be collected from the consignor or consignee instead of the transport company.

"Transportation sector margins have hit rock bottom. The service tax would queer the pitch further," Roy added.