The railways will not impose service tax on passenger fare and freight traffic from July 1. This after minister of railways Mukul Roy wrote to Prime Minister Manmohan Singh, who is in-charge of the finance portfolio, requesting him not to introduce service tax.

Roy had earlier said he was confident that the Prime Minister would not introduce service tax on passenger fare and freight traffic. “The railways is not a profit-making body and never before has service tax been levied,” said Roy.

Passenger fares in AC-I, AC-II and first class and freight charge were to rise from July 1 in case the service tax was imposed.

This is the second time the railway ministry has approached the finance ministry asking it to revoke their plan. A source in the ministry said there was a probability that the second request too might be rejected. Roy said he wrote to then finance minister Pranab Mukherjee requesting the exemption.