Service tax on travel agents

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 November 2012 Sir
I am from Air Travel Agency. Issuing tickets directly for Airlines and paying Service tax to Govt.Also buying from Consolidators/ big travel agents and paying Service tax to them. Also We also book hotels for our clients.

Now service tax department asked for 5 years records. After checking the same they told us the irregularities done by us:

We are Travel Agents and if purchased tickets from Consolidator we have to pay service tax @ 12.36 % on all commissions earned. Kindly note that we have collected service tax on basic fares and paid to the consolidators as in case of our own stock Tickets.

Department also insisted us to club Air tickets and hotel bookings and transfer to Hotel package. A lot of difference is there in hotel package and clubing the Air ticket and Hotel bookings. Though Tour package covers complete tour including Transfer from Airport to Hotel, all meals etc.

Also we have received commission on CRS. This commission has nothing to do with client service. Department also asking service tax & penalties.

Now department is asking heavy payments on account of service tax and penalties

We can discuss in detail all the queries raised by the department.

Sudhir Kr Gupta
9891266930

Amol S Joglekar

Amol S Joglekar (Expert)
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04 November 2012 Let us not get mixed with VALUE added kind of concept in service tax. It is in VAT... so let us keep it aside. The trade gimmics suggest that if you book the ticket directly... the customer will come to know your profit and that is where a travel agent does not the exact amount to customer. (I am not saying anything good or bad about it... this is the rule of your trade.) Now, the entire contract becomes "service taxable". Has you charged only booking charges to customer... service tax would be chargeable on booking charges only.

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