Who is a “Tour Operator” under the Service Tax
Laws?
Tour operator means any person
engaged in the business of planning, scheduling, organizing, arranging tours
(which may include arrangements for accommodation, sightseeing or other similar
services) by any mode of transport, and includes any person engaged in the
business of operating tours.
What is the value of taxable service provided
by a tour operator?
The value
of taxable service provided by a tour operator to a client is the gross amount
charged by such operator from the client for services in relation to a tour and
includes the charges for any accommodation, food or any other facilities
provided in relation to such tour.
What are the rates of service tax applicable
on various services provided by a tour operator?
|
S.No.
|
Taxable Service
|
Partial abatement/ Composition Scheme
|
Conditions
|
Statutory Reference
|
|
1
|
Accommodation
booking service
|
10% of amount
charged
|
1) No CENVAT
Credit.
2) Invoice
should be inclusive of cost of accommodation
|
S. No. 11(ii)
of Notif. No. 26/2012-ST dt 20.6.12
|
|
2
|
Package tours - wherein transportation,
accommodation for stay, food, tourist guide, entry to monuments and other
similar services in relation to tour are provided as part of the package
|
Tax is payable on 25% of gross
amount charged
|
1)
No CENVAT credit available.
2)
Bill to be inclusive of all charges for the tour.
|
S. No. 11(i) of Notif. No.
26/2012-ST dt 20.6.12
|
|
3
|
Tour operator –
providing services solely of arranging or booking accommodation for any
person in relation to a tour.
|
Tax is payable
on 10% of amount charged
|
1) No CENVAT
credit available.
2) Bill to be
inclusive of all charges for such accommodation.
3) This
exemption shall not apply in such cases where the invoice, bill or challan
issued by the tour operator, in relation to a tour, only includes the service
charges for arranging or booking accommodation for any person and does not
include the cost of such accommodation.
|
S. No. 11(ii)
of Notif. No. 26/2012-ST dt 20.6.12
|
|
4
|
Tour operator – Other than abovementioned
services
|
Tax is payable on 40% of amount
charged.
|
1)
No CENVAT credit available.
2)
Bill to be inclusive of all charges for the tour.
3)
The bill issued indicates that the amount charged in
the bill is the gross amount charged for such a tour.
|
S. No. 11(iii) of Notif. No.
26/2012-ST dt 20.6.12
|
|
5
|
Air Travel
Agent
|
Option to pay
service tax at flat rate on ‘basic fare’ @0.6% in case of domestic booking
and 1.2% in case of international booking – plus E. Cess
|
No restriction
on availment of CENVAT credit.
Option, once
exercised, will apply uniformly in respect of all the bookings of passage for
travel by air made during the financial year.
|
Rule 6(7) of
Service Tax Rules
|
Who is an Air Travel Agent? Are his services
chargeable to Service Tax?
An
“Air Travel Agent” is any person engaged in providing any service connected with the booking of passage
for travel by air.
Any service
provided or to be provided to any person, by an air travel agent in relation to
booking of passage for travel by air is a taxable service.
How is the taxable value of service provided by
an air travel agent to be computed? What are the specific inclusions or
exclusions?
In
case of air travel agent, the value of taxable service is the gross amount
charged by such agent from the customer for services in relation to the booking
of passage for travel by air, excluding the air fare but including the
commission, if any received from airline in relation to such booking.
Thus, the value of taxable
services will include the commission
received by the travel agent from the airline. However, it will exclude the
fare amount collected from the customer.
The
air travel agents receive certain commission for domestic and international
tickets from the airlines. The details of the commissions payable by the
airlines is indicated in the agency agreement entered into between the airline
and the air travel agent. The travel agent files a fortnightly return to the
airlines indicating the details of tickets booked, fare collected and the commission
earned along with other particulars. After adjusting the commission, he remits
the balance amount to the airlines. This fortnightly return would be the basis
for assessment of Service Tax in respect of air travel agents.
Can the air travel agent
pay service tax under any composition scheme?
An
option has been given to the air travel agents to pay the Service Tax under the
composition scheme as follows:
·
For booking domestic
tickets: @ 0.6% of the basic fare
·
For booking international
tickets: @ 1.2% of the basic fare
The
basic fare is defined as that part of the fare on which commission is payable
by the airlines.
E.
Cess and S. H. E. Cess @3% of the tax amount determined as above will be
payable additionally.
Which are the specified
categories of persons, providing services to whom are exempt from service tax?
Services provided to the following persons are
fully exempt:
·
United Nations or
any such specified International Organization
·
Office of a foreign diplomatic
mission or consular post in India
·
Personal use or for the use of
family members of diplomatic agents or career consular officers posted in a
foreign diplomatic mission or consular post in India
What is the place of provision of passenger
transportation services?
The place of
provision of a passenger transportation service is the place where the
passenger embarks on the conveyance for a continuous journey.
What does a “continuous journey” mean?
A “continuous
journey” means a journey for which:-
(i)
a single ticket
has been issued for the entire journey; or
(ii)
more than one
ticket or invoice has been issued for the journey, by one service provider, or
by an agent on behalf of more than one service providers, at the same time, and
there is no scheduled stopover in the journey.
What is the meaning of a stopover? Do all
stopovers break a continuous journey?
“Stopover” means
a place where a passenger can disembark either to transfer to another conveyance
or break his journey for a certain period in order to resume it at a later
point of time. All stopovers do not cause a break in continuous journey. Only
such stopovers will be relevant for which one or more separate tickets are
issued. Thus a travel on Delhi-London-New York-London-Delhi on a single ticket
with a halt at London on either side, or even both, will be covered by the
definition of continuous journey. However if a separate ticket is issued, say
New York-Boston-New York, the same will be outside the scope of a continuous
journey.
Whether service tax will apply on
related fees/charges on journeys starting outside India, even if the
transaction for related charges is made in India?
and
Whether service tax will
apply on related fee charges on journeys starting in India, even if the
transaction for related charges is made outside India?
As per Clarification given in Draft
Circular F. No.354 /146/2012 – TRU dated 27.09.2012:
“According to Rule 11 of
Place of Provision of Services Rules, 2012, the place of provision of a
passenger transportation service is the place where the passenger embarks on
the conveyance for a continuous journey. Therefore, if place of embarkation of
passenger is located within the taxable territory, service tax is leviable on
the gross amount payable for such continuous journey, irrespective of where the
ticket is booked and where fees/charges are collected. If the place of
embarkation of a passenger on a continuous journey falls outside the taxable
territory, service tax is not leviable, irrespective of where the tickets are
booked and where fees/charges are collected. However, only such charge will be
determined under Rule 11 of POP as are directly related to the continuous
journey. The POP of other charges will be judged on their own merits.”
However, it is to be noted that as per Rule 8
of Place of Provision for Service Rules, 2012, where the service receiver and
service provider are located in the taxable territory, the provision of service
would be the location of service receiver irrespective of where the service is
performed, delivered or consumed.
For determining “location of service” as
above, if the service recipient has obtained service tax registration, it is
the registered premises of the service receiver. However, if the service
receiver is not registered under service tax, his location will be determined
as follows:
1.
Location of
business establishment
2.
Location of fixed
establishment
3.
Where services
are used at more than one establishment, the establishment most directly
concerned with the use of service
4.
In the absence of
above, the usual place of residence.
