Service Tax rate applicable for Hotel & Vehicle booking
This query is : Resolved
27 August 2009
Hi All
One of my clients are actually the travel booking agents, they are not direct agents for booking the hotel & vehicle booking, they are just the mediators between the Travellers & Travel agents.
They raise an Invoice to the Travellers based on the expenses incurred to them on travel agents.
They say their applicable Service Tax rate is as follows:
1.For booking for Hotels only –1.03%.
2.For booking of both Hotel & Vehicles - 2.58%.
3.For booking of Vehicles only – 4.12%.
Can anyone pls tell me are they correct that their service is taxable on above percent only or at normal service tax rate of 10.3% itself.
Pls clarify??
One of my clients are actually the travel booking agents, they are not direct agents for booking the hotel & vehicle booking, they are just the mediators between the Travellers & Travel agents.
They raise an Invoice to the Travellers based on the expenses incurred to them on travel agents.
They say their applicable Service Tax rate is as follows:
1.For booking for Hotels only –1.03%.
2.For booking of both Hotel & Vehicles - 2.58%.
3.For booking of Vehicles only – 4.12%.
Can anyone pls tell me are they correct that their service is taxable on above percent only or at normal service tax rate of 10.3% itself.
Pls clarify??
27 August 2009
They can enjoy the abatement of services for hotel & vehicle booking.
For other services like pp/visa 10.3% would apply
and for dom air tkts 0.618% and for intl 1.236% are applicable
For other services like pp/visa 10.3% would apply
and for dom air tkts 0.618% and for intl 1.236% are applicable
27 August 2009
But what percent of abatement can be allowed?
Can u pls let me know the exact rate of Service tax rate applicable for the above?
Can u pls let me know the exact rate of Service tax rate applicable for the above?
24 July 2025
Great question about the service tax rates and abatement for travel agents and their hotel & vehicle booking services!
---
## Service Tax Rate for Hotel & Vehicle Booking by Travel Agents (As of 2009)
### 1. **Normal Service Tax Rate (at that time):**
* The standard service tax rate was **10.3%** (including education cess).
---
### 2. **Abatement for Travel Agents (Notification No. 30/2004-ST and related):**
Travel agents were eligible for **abatement** (partial exemption) on the gross amount charged, because they often collect payments on behalf of hotels, airlines, vehicle operators, etc.
---
### 3. **Abatement Percentages:**
| Service | Abatement Allowed (%) | Taxable Portion (%) | Effective Service Tax Rate (at 10.3%) |
| -------------------------------- | --------------------- | ------------------- | ------------------------------------- |
| **Hotel Booking Only** | 90% | 10% | 1.03% (i.e., 10.3% × 10%) |
| **Vehicle Booking Only** | 60% | 40% | 4.12% (i.e., 10.3% × 40%) |
| **Both Hotel & Vehicle Booking** | Mixed (Pro-rata) | Approx. 25%\* | Approx. 2.58% (10.3% × 25%) |
\* The 25% taxable portion for combined services is roughly based on weighted average.
---
### 4. **Explanation:**
* **Hotel booking** service tax is charged only on **10% of the gross amount** (after 90% abatement).
* **Vehicle booking** service tax is charged on **40% of the gross amount** (after 60% abatement).
* When both services are combined, the abatement is calculated based on the proportion of each service.
---
### 5. **Other Travel Services:**
* For **passport/visa services**, normal **10.3%** rate applies (no abatement).
* For **domestic air ticketing**, special rates apply:
* Domestic Air Ticketing – **0.618%**
* International Air Ticketing – **1.236%**
---
### **Summary Table:**
| Service | Abatement (%) | Taxable Value (%) | Service Tax Rate (at 10.3%) |
| ----------------------- | ------------- | ----------------- | --------------------------- |
| Hotel Booking | 90% | 10% | 1.03% |
| Vehicle Booking | 60% | 40% | 4.12% |
| Hotel + Vehicle Booking | Mixed | \~25% | \~2.58% |
| Passport/Visa | 0% | 100% | 10.3% |
---
## ✅ **Conclusion:**
Your client's figures for service tax rates (1.03%, 4.12%, and 2.58%) are **correct** as per the abatement rules applicable in 2009.
---
If you want, I can help you draft a **compliance note** explaining this to your client or assist with **service tax calculations** for their invoices. Would you like that?
---
## Service Tax Rate for Hotel & Vehicle Booking by Travel Agents (As of 2009)
### 1. **Normal Service Tax Rate (at that time):**
* The standard service tax rate was **10.3%** (including education cess).
---
### 2. **Abatement for Travel Agents (Notification No. 30/2004-ST and related):**
Travel agents were eligible for **abatement** (partial exemption) on the gross amount charged, because they often collect payments on behalf of hotels, airlines, vehicle operators, etc.
---
### 3. **Abatement Percentages:**
| Service | Abatement Allowed (%) | Taxable Portion (%) | Effective Service Tax Rate (at 10.3%) |
| -------------------------------- | --------------------- | ------------------- | ------------------------------------- |
| **Hotel Booking Only** | 90% | 10% | 1.03% (i.e., 10.3% × 10%) |
| **Vehicle Booking Only** | 60% | 40% | 4.12% (i.e., 10.3% × 40%) |
| **Both Hotel & Vehicle Booking** | Mixed (Pro-rata) | Approx. 25%\* | Approx. 2.58% (10.3% × 25%) |
\* The 25% taxable portion for combined services is roughly based on weighted average.
---
### 4. **Explanation:**
* **Hotel booking** service tax is charged only on **10% of the gross amount** (after 90% abatement).
* **Vehicle booking** service tax is charged on **40% of the gross amount** (after 60% abatement).
* When both services are combined, the abatement is calculated based on the proportion of each service.
---
### 5. **Other Travel Services:**
* For **passport/visa services**, normal **10.3%** rate applies (no abatement).
* For **domestic air ticketing**, special rates apply:
* Domestic Air Ticketing – **0.618%**
* International Air Ticketing – **1.236%**
---
### **Summary Table:**
| Service | Abatement (%) | Taxable Value (%) | Service Tax Rate (at 10.3%) |
| ----------------------- | ------------- | ----------------- | --------------------------- |
| Hotel Booking | 90% | 10% | 1.03% |
| Vehicle Booking | 60% | 40% | 4.12% |
| Hotel + Vehicle Booking | Mixed | \~25% | \~2.58% |
| Passport/Visa | 0% | 100% | 10.3% |
---
## ✅ **Conclusion:**
Your client's figures for service tax rates (1.03%, 4.12%, and 2.58%) are **correct** as per the abatement rules applicable in 2009.
---
If you want, I can help you draft a **compliance note** explaining this to your client or assist with **service tax calculations** for their invoices. Would you like that?
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