[sustran] New service tax makes air-conditioned buses uncool in Bengaluru

[Vinay Baindur]

How did the idea of 1000 new AC buses get into their head?
Which lobby is now at work here?



Centre's new service tax makes air-conditioned buses uncool in Bengaluru
By Arka Bhattacharya
<http://economictimes.indiatimes.com/etreporter/author-arka-bhattacharya.cms>,
ET Bureau | 20 Jun, 2016
[image: At a time when the BMTC is plans to have 1,000 AC buses by 2018, a
fall in demand, thanks to the increased fares, could be disastrous for the
corporation.]At a time when the BMTC is plans to have 1,000 AC buses by
2018, a fall in demand, thanks to the increased fares, could be disastrous
for the corporation.

Transport Corporatio...






 Metropolitan Transport Corporation
<http://economictimes.indiatimes.com/transport-corporation-of-india-ltd/stocks/companyid-12950.cms>
 (BMTC) and the Karnataka State Road Transport Corporation (KSRTC) are
fighting tooth and nail against the service tax levied on AC
<http://economictimes.indiatimes.com/topic/AC> carriage buses.

The service tax has pushed up the already expensive AC bus fares by 6%.

The Union Budget brought all state-owned transport corporations under this
service tax bracket.Under the new regime, a service tax of 15% is
applicable on 40% of all revenues collected from AC bus services. The
corporations transferred the burden to commuters. Non-AC buses are,
however, exempt.

Bengaluru commuters affected by this move are mainly fliers travelling to
and from the airport and the IT sector employees.

"I have written to the secretary, ministry of finance, asking them to
reconsider the proposal. Today it is AC buses, tomorrow it could be
extended to non-AC services," said KSRTC MD Rajendar Kumar Kataria.

Kataria, who is also vice-president of the Association of State Road
Transport Undertakings (ASRTU), said all state transport undertakings that
run AC buses opposed the move. The ASRTU
<http://economictimes.indiatimes.com/topic/ASRTU> consists of more than 60
STUs, which run almost 4,000 AC buses amongst them.

BMTC's MD Ekroop Caur too has kept up the pressure. "I have written to the
Ministry of Urban Development (MoUD) and the Ministry of Road Transport and
Highways (MoRTH) regarding this but we are yet to hear back from them," she
said.

Elangovan <http://economictimes.indiatimes.com/topic/Elangovan> K, a
frequent Volvo commuter on the BellandurMarathahalli route, says driving a
small car is more economical.

"This move is just going to put more cars back on the road and add to the
congestion. The buses returning from Whitefield are mostly empty. In such
cases, the BMTC should introduce dynamic pricing if it senses lower
occupancy on a particular route," he added.

Close to 11% of BMTC's fleet comprises AC buses, mainly Volvos.Numbering
close to 700, these vehicles are also rented out by companies wishing to
provide pickup and drop services to their employees. AC buses operate
almost 640-650 sched ules a day and 4% of the fleet is kept as reserve to
be used as spares for vehicles on private routes.

At a time when the BMTC is plans to have 1,000 AC buses by 2018, a fall in
demand, thanks to the increased fares, could be disastrous for the
corporation.

He also confirmed that the decision to limit the service tax to only 40% of
AC bus revenues was part of the Centre's plan to implement service tax in
STUs in phases.

Prices would shoot up once service tax was completely implemented.Service
tax collected on BMTC's AC services is likely to touch Rs 2 crore this
financial year.