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Notification on service tax in 2017 for tour operators

Ananthalakshmi 
Updated on 07 October 2020

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New Notification No. 01/2017, 02/2017, 03/2017 and 04/2017 dated 12.01.2017.

These notifications shall come into force from 22.01.2017.

Tour Operators:

Category of Service Provider

Current Status

Changes by Notification

Services to same group

Under Mega exemption:

Substitution:

(g) business facilitator or a business correspondent to a banking company or an insurance company, in a rural area

Notification No.1/2017 in entry 29:

"(g) business facilitator or a business correspondent to a banking company with respect to accounts in its rural area branch."

i.e. Service tax exemption on services rendered by business correspondents or business facilitators to banking companies for its rural branch accounts.

Other Services:

Under Mega exemption:

Proviso Substitution:

Notification No.1/2017in entry 34:

"Provided that the exemption shall not apply to -

(i) online information and database access or retrieval services received by persons specified in clause (a)-Government, a local authority, a governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession); or

(ii) services by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India;".

Aggregator- A New Definition

Under Service Tax Rules:

Insertion

Notification No.2/2017-in rule 2 (Definitions), in sub-rule (1)- in clause (aa)

 "Provided that aggregator shall not include such person who enables a potential customer to connect with persons providing services by way of renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes subject to following conditions, namely:-

(a)  the person providing services by way of renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes has a service tax registration under provision of these rules; and

(b)  whole of the consideration for services provided by such service provider is received directly by such service provider and no amount, which forms part of the consideration of services of such service provider, is received by the aggregator directly from either recipient of the service or his representative.";

Transportation of goods by a vessel

Under Service Tax Rules:

Insertion

Notification No.2/2017 -in rule 2(Definitions), in sub-rule (1)- in clause (d) in sub-clause(i), after item (EEB), following shall be inserted

"(EEC) in relation to services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India, the person in India who complies with sections 29, 30 or 38* read with section 148 of the Customs Act, 1962 (52 of 1962) with respect to such goods;". [RCM]

Transportation of goods by a vessel

Under Reverse Charge Mechanism

Insertion

Notification No.3/2017 in paragraph I, in clause (A), after the sub-clause (vi), the following sub-clause shall be inserted, namely:-

i)"(vii) provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India;";

ii) in paragraph (II), in the Table, after Sl. No. 11 and the entries relating thereto, the following Sl. No. and entries shall be inserted, namely:-

12. in respect of services provided or agreed to be provided by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India is 100%(by Service Receiver)

*Note: Section 29 refers to 'person in charge of the vessel or aircraft'; Section 30 contemplates person in charge of the vessel or aircraft as well as a person other than a carrier who is authorized to issue delivery order in favour of an importer to file an import manifest; Section 38 confers power on the proper officer to require the person in charge to produce documents; Section 148 refers to agents appointed by the person in charge.

Tour Operators

Under Abetment:

Service

Taxability Portion

Arrangement of accommodation

10% of the value

Other category of tour operators

30% of the value

 

Input Credit:

  1. CENVAT credit was not available on inputs and capital goods.
  2. Credit was available on input services only when it pertained to usage of services of another tour operator.

Under Abetment: [Notification No.04/2017]

Service

Taxability Portion

Only one category of tour operators**

60% of the value

 

Input Credit:

  1. CENVAT credit was not available on inputs and capital goods.
  2. CENVAT credit can be availed on all input services.

**Note:

The bill issued for this purpose indicates that it is inclusive of charges of accommodation and transportation required for such a tour and the amount charged in the bill is the gross amount charged for such a tour including the charges of accommodation and transportation required for such a tour.".


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