Service tax on travel/tour operators

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vijay (Querist)

06 August 2013
sir,

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

vijay

vijay (Querist)

12 August 2013 i am not able to get an answer for my query on service tax. somebody out there should be to resolve my query.

vijay

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

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!

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