Service Tax on Air Travel Agent & Tour Operator

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Service Tax in India is levied on all types of services except a few specified services mentioned in the Negative List of Services. Service Tax on Air Travel Agents & Tour Operators is also levied and the rate of service on Air Travel Agent and the manner of computation has been discussed in this Article.

Service Tax on Air Travel Agents for Air Ticket Bookings

When an Air Travel Agents books a Ticket for you, he charges a commission for booking the air tickets. As he has provided you a service by booking the tickets on your behalf, Service Tax would be levied on the Commission charged by him for booking the Tickets.

In most of the cases, the Air Travel Agent does not charge any commission from the person booking the air tickets and charges a commission from the Airline whose ticket has been booked. In such cases, the Commission of the Air Travel Agent is not disclosed in the Invoice and only the Air Ticket Fare is disclosed in the Invoice.

In such cases where the Commission of the Air Travel Agent is not disclosed in the Invoice and only the Air Ticket Fare is mentioned in the Invoice, the Service Tax would be levied from 1st June 2015 onwards at the rates mentioned below:-

In case of Domestic Bookings 0.70% of the Basic Fare
In case of International Bookings 1.4% of the Basic Fare

Service Tax on Tour Operator

Budget 2014 has exempted Service Tax on Services provided by Indian Tour Operators to Foreign Tourists in relation to a tour wholly conducted outside India is exempted from the levy of Service Tax.

However, Service Tax would continue to be levied on Tour Operators in all other cases except the case specified above which has been specifically exempted in Budget 2014.

The rate of Service Tax on Tour Operators is as follows

Type of Service Abatement allowed Taxable Portion Effective Rate of Service Tax (incl. Cess)
1. Services by a Tour Operator in relation to a Package Tour 75% 25% 3.50%
2. Services by a Tour Operator in relation to a Tour, if the Tour Operator is providing Services solely of arranging or booking accommodation for any person 90% 10% 1.40%
3. Service provided by a Tour Operator other than the 2 types of Services specified above. 60% 40% 5.6%

A Personal Finance enthusiast, Karan is the founder of charteredclub.com and loves to discuss about Money related matters.