07 March 2009
Service tax is not charged on domestic air tickets. Instead, it is charged on the commission earned by the Air travel agent on the commission received from the airlines excluding the amount of airfare.
Said service would be taxable under taxable category of "Air Travel Agent" and service should be in "connection" to booking of "passage" and the said passage must be for travel by air.
Further, rate is standard across all services i.e. 10.30% (inclusive of cess).
07 March 2009
However, I would like to correct that in the second option Mr. Mithun Khatry suggested the rate would be .618 (.6 + 3% cess) as per Rule 6 (7) of the Service tax rules, 1994.
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