India defers service tax levy on railway freight

India’s Ministry of Finance has deferred the implementation of service tax levy on transportation of goods by rail to July 1, 2010 from the earlier proposed date of April 1, 2010. The country’s wholesale price index-based inflation has already exceeded the 8.5% projection by the Reserve Bank of India and the government does not want any of its actions to fuel inflationary expectations. The government has also deferred implementing service tax exemption on certain goods carried by rail including petroleum products. The exemption on such goods will now come into effect from July 1, 2010, along with 70% abatement. (April 1, 2010)