Calculation of threshold limit for service tax
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
29 February 2016
Assesses providing services of Air Travel Agent and Tour operator service of booking accommodation for person in relation of tour. His gross receipts during year is Approx Rs. 30L (Including air fare and Hotel booking charges). But his actual service portion(his service Charges) is less than Rs.10L.
My query is whether they require to take registration or service tax or not? if yes on which amount
My query is whether they require to take registration or service tax or not? if yes on which amount
29 February 2016
To determine whether the turnover has exceeded the threshold limit or not one has to look at the sales invoice issued by the assessee. It appears that the assessee in question is providing services of Air Travel Agent and Tour Operator. The rules for valuation of the taxable services is different in both the cases.
Firstly let me analyze the two services. Tour operator plans and arrange the tour but travel agent only books the tickets and gets commission or brokerage on selling those tickets.
The travel agent does not show separately the cost of the air ticket (paid to the airlines) and his service charges (commission / brokerage) in the sales invoice. when such bifurcation is not done, the entire sale consideration is treated as taxable service. Since it is a known fact that travel agent retains only a small portion of the billed ticket amount, CBEC has issued a notification that the taxable service would be 0.7% of domestic bookings and 1.4% of international bookings, but the taxable turnover would be the entire consideration.
Similarly unless the tour operator has bifurcated the details in his invoice and has proper supporting documents for the said expenses, the claim of service charges (commission / brokerage) would be difficult to prove.
Therefore, for all practical purposes you have rendered taxable services of Rs.30 lakhs and hence are liable for registration with the Central Excise Authorities as a service provider in the catogery of Travel Agency & Tour Operator Services.
Firstly let me analyze the two services. Tour operator plans and arrange the tour but travel agent only books the tickets and gets commission or brokerage on selling those tickets.
The travel agent does not show separately the cost of the air ticket (paid to the airlines) and his service charges (commission / brokerage) in the sales invoice. when such bifurcation is not done, the entire sale consideration is treated as taxable service. Since it is a known fact that travel agent retains only a small portion of the billed ticket amount, CBEC has issued a notification that the taxable service would be 0.7% of domestic bookings and 1.4% of international bookings, but the taxable turnover would be the entire consideration.
Similarly unless the tour operator has bifurcated the details in his invoice and has proper supporting documents for the said expenses, the claim of service charges (commission / brokerage) would be difficult to prove.
Therefore, for all practical purposes you have rendered taxable services of Rs.30 lakhs and hence are liable for registration with the Central Excise Authorities as a service provider in the catogery of Travel Agency & Tour Operator Services.
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