The freight charges will go up by 3.6 percent from July 1 with the help of service tax. SK Goel the chairman of Central Board of Excise and Customs (CBEC) informed the reporters on the sidelines of Assocham meet in New Delhi.

Goel said, “The government had given service tax exemption on goods carried by railways till June 30, 2012. From July 1 using railways to transport goods will come under service tax net”. Goel even said that the Railways have not approached the Revenue Department for the exemption m service tax.

The Railways transport items like steel, crude oil, coal , fertilizers, apart from grains and vegetables. There are fears that the raise in the freight might even affect a rise in the inflation.

But Goel on the other hand assured that the service tax on freight would have only marginal impact on the prices as the state run transporter enjoys a 70 percent abatement on the total freight charges. Goel said, “This level of duty is unlikely to be a big burden on consumers and would not fuel inflation”. A target has been set by the finance ministry to mop up Rs. 1.24 lakh crore in the current fiscal from service tax.