How to calculate gst ?

This query is : Resolved

Prateek Rajpal (Querist)
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29 July 2017 I AM AN IATA AGENT WHO IS PROVIDING AIR TRAVEL AGENT SERVICES TO OUR DOWNLINE AGENTS. ON WHICH AMOUNT DO WE HAVE TO TAKE GST, WHETHER IT IS 18% OF 5% OF BASIC FARE OR DIRECTLY 18% OF COMMISSION THAT WE ARE GIVING TO OUR AGENTS.
FOR eg. BASIC FARE RS. 5000 + TAXES RS. 1000 = RS. 6000, COMMISSION GIVEN RS. 200
CALCULATION OF GST:
5000*5%*18%=45
OR
200*18%=36
KINDLY SUGGEST WHICH PROCEDURE TO FOLLOW ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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29 July 2017 GST payable at 0 .90% on basic fare on domestic flights and at 1.8% on basic fare of international flights.

Prateek Rajpal

Prateek Rajpal (Querist)
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30 July 2017 But i am a travel agent, i only earn commission from airlines. If i pay 0.90 and 1.8 of basic fare, that would increase the ticket fare. I think i have to pay gst on commission, so kindly suggest me what gst would be payable and how that would be calculated

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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28 July 2024 As an IATA agent providing air travel services, you need to understand the GST implications on the commission you earn from airlines. Here’s how to calculate GST based on the services you provide:

### **GST Calculation for Travel Agents**

**1. **Understanding the Services and GST Rates:**
- **Travel Agents’ Services:** As a travel agent, you generally earn a commission from airlines for booking tickets.
- **GST Rate:** For travel agent services, the GST rate is typically 18% on the commission received from airlines.

### **2. GST Calculation Based on Your Example**

#### **Scenario:**

- **Basic Fare:** ₹5,000
- **Taxes:** ₹1,000
- **Total Ticket Price:** ₹6,000 (This includes the basic fare and taxes)
- **Commission Received:** ₹200

**GST Rate on Commission:** 18%

### **Procedure for GST Calculation:**

1. **Commission-Based GST Calculation:**

Since you are earning a commission from the airlines, GST should be calculated on the commission amount you receive.

\[
\text{GST} = \text{Commission} \times \text{GST Rate}
\]

- **Commission Received:** ₹200
- **GST Rate:** 18%

\[
\text{GST} = ₹200 \times 18\% = ₹36
\]

2. **GST Calculation on Total Fare (Not Applicable in This Case):**

The GST on the total fare (basic fare + taxes) is not relevant for your case since you are not charging GST on the total ticket fare. GST is applicable only on the commission you earn.

### **Summary of GST Calculation:**

1. **GST Payable on Commission:**

- **Commission:** ₹200
- **GST Rate:** 18%
- **GST Amount:** ₹36

2. **You should pay GST of ₹36 on the commission of ₹200 received from airlines.**

### **3. Filing and Compliance:**

- **Invoice Generation:** Ensure that you issue an invoice to the airline (if required) showing the GST on the commission.
- **GST Returns:** Report the GST collected on commission in your GST returns.
- **Maintain Records:** Keep records of commission received, GST invoices, and other relevant documents.

### **4. Important Considerations:**

- **No GST on Basic Fare or Taxes:** You are not required to charge GST on the basic fare or taxes paid by the customers as you are earning a commission and not directly charging for the services rendered to customers.
- **Verify with Tax Consultant:** For precise compliance and in case of any changes in the tax laws, it is advisable to consult with a tax professional or consultant.

### **Example Breakdown:**

- **Total Fare (Basic Fare + Taxes):** ₹6,000
- **Commission Received:** ₹200
- **GST on Commission:** ₹36 (18% of ₹200)

Thus, your GST liability is ₹36, which should be paid on the commission of ₹200 that you received from the airlines.

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