is service tax applicable in the first year of operation/commencement of business if the turnover exceeds rs. 10 lacs, if yes, then what is the percentage
24 July 2025
Hey Vijay! Here’s a clear answer for you regarding **service tax on travel/tour operators**:
* **Yes**, service tax is applicable **from the very first year** if your turnover exceeds the threshold limit of **Rs. 10 lakhs** in a financial year. * For **tour operators**, service tax is charged at **15%** on the value of taxable services. * However, there is an **abatement** of 40% on the gross amount charged for tour operator services (except for transport of passengers by air or rail, where different rates apply).
So effectively, service tax is levied on **60% of the gross amount** charged by tour operators at the rate of 15%.
### Example:
If your turnover crosses Rs. 10 lakhs, and you charge Rs. 1,00,000 for a tour package, service tax will be calculated as:
`Taxable value = 60% of Rs. 1,00,000 = Rs. 60,000` `Service tax @ 15% on Rs. 60,000 = Rs. 9,000`
You should register for service tax as soon as you cross the Rs. 10 lakh limit and start charging service tax accordingly.
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If you want, I can help you with how to register or file returns too. Let me know!
CAclubindia
