With the exit of TrinamoolCongress from the UPA, the finance ministry has decided to levy service tax on AC and freight services fares, which are set to increase by 3.7 per cent from October 1.   

Fares of AC first class, executive class, AC-2 tier, AC-3 tier, AC chair car will go up by 3.708 per cent from October 1 and a notification to this effect will be issued today, a senior railway ministry official said.   

The decision for levying service tax on AC classes and freight and auxiliary services was taken yesterday at a meeting between Railway Minister C P Joshi and Finance Minister P Chidambaram.   

The service tax will apply to tickets issued in advance for journeys to commence on or after the date of its implementation. In case of tickets already issued excluding service tax, it will be ensured that the same is recovered either by TTEs in the train or by the booking offices before commencement of journey.