ST Query
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
16 September 2010
Whether air travel Agent taken composition scheme of paying .6% & 1.2 % respectively can take input credit.
On what services it can take input credit???
On what services it can take input credit???
16 September 2010
It is a composite rate and hence no input credit can be taken for payment of the same.
16 September 2010
In case of some services e.g. Air Travel agent, catering services, mandap keeper services and construction services, service tax is payable at lower rates, i.e. partial abatement is available from gross value, vide 1/2006-ST dated 1-3-2006.
The lower rate is applicable if the service provider does not avail Cenvat credit of duty/tax on inputs, input services and capital goods. Till 28-2-2006, he was entitled to avail Cenvat credit on input services. W.e.f. 1-3-2006, he cannot avail any Cenvat credit, if he avails the partial abatement.
Option to pay service tax at flat rate on ‘basic fare’ @ 0.6% in case of domestic booking and 1.2% in case of international booking [rule 6(7) of Cenvat Credit Rules] is covered under partial abatement, so no input credit is allowed in those cases.
The lower rate is applicable if the service provider does not avail Cenvat credit of duty/tax on inputs, input services and capital goods. Till 28-2-2006, he was entitled to avail Cenvat credit on input services. W.e.f. 1-3-2006, he cannot avail any Cenvat credit, if he avails the partial abatement.
Option to pay service tax at flat rate on ‘basic fare’ @ 0.6% in case of domestic booking and 1.2% in case of international booking [rule 6(7) of Cenvat Credit Rules] is covered under partial abatement, so no input credit is allowed in those cases.
Querist : Anonymous
Querist :
Anonymous
(Querist)
16 September 2010
What in case Service Provider is giving services of Air Travel agent as well other service such as event mgmt.
Further in case Travel agent is only broking between Event management Service Provider & Client,if it requires to pay ST as Event magmt company already charges ST
Further in case Travel agent is only broking between Event management Service Provider & Client,if it requires to pay ST as Event magmt company already charges ST
25 July 2025
Great questions about **Service Tax (ST) for Air Travel Agents and related services**! Here's a detailed breakdown:
---
### 1. **Input Credit with Composition Scheme for Air Travel Agents**
* Air travel agents can opt for **composition scheme** where they pay ST at a **composite rate of 0.6% (domestic)** and **1.2% (international)** on the **basic fare**.
* **When composition scheme is opted, no CENVAT credit (input credit) is allowed.**
* This is because the **partial abatement** under Notification No. 1/2006-ST (dated 01-03-2006) is conditional on **not availing CENVAT credit on inputs, input services, or capital goods**.
* So, if the agent opts for the **composition scheme**, they **cannot claim input credit** on any services or goods used in their business.
---
### 2. **Services eligible for Input Credit when NOT under Composition**
* If the air travel agent **does not opt for composition**, and pays ST at the normal rate on full value of service, **they can avail input credit** on:
* Inputs (goods used for business operations)
* Input services (e.g., telephone bills, office expenses, consultancy, advertising)
* Capital goods (office equipment, computers, etc.)
* This is allowed under the **CENVAT Credit Rules, 2004**.
---
### 3. **Air Travel Agent also Providing Other Services (like Event Management)**
* If the agent provides **multiple taxable services**, like:
* Air travel agency services (composition or normal scheme)
* Event management services (taxable under normal rate)
* The agent should **maintain separate accounts** for services under composition and normal scheme.
* **Input credit can be claimed only for services charged under normal scheme**, not under composition.
* Alternatively, agent may choose to pay ST on all services under normal rates to avail credit.
---
### 4. **Travel Agent Only Broking Event Management Service**
* If the travel agent is **only a broker between the event management service provider and client**, and does **not provide any taxable service themselves**, then:
* The **event management company charges ST** on their service.
* The broker may not have a liability to pay ST unless they are charging a separate service fee.
* If the travel agent charges **commission or fee** for broking service, that amount is taxable.
---
### **Summary Table**
| Situation | Service Tax Payable | Input Credit Allowed? |
| ---------------------------------------------------- | --------------------------------- | ------------------------------------ |
| Air travel agent opts for composition (0.6%, 1.2%) | Yes, at composite rate | No |
| Air travel agent pays normal ST on full value | Yes, at normal rate | Yes |
| Provides both air travel + event management services | Separate accounting required | Credit on normal rated services only |
| Travel agent only brokers event management service | ST payable only on commission fee | Credit if normal ST paid |
---
If you want, I can help prepare:
* A sample **accounting treatment** for mixed services
* A **note explaining CENVAT rules on input credit** for your auditors or team
Would you like me to do that?
---
### 1. **Input Credit with Composition Scheme for Air Travel Agents**
* Air travel agents can opt for **composition scheme** where they pay ST at a **composite rate of 0.6% (domestic)** and **1.2% (international)** on the **basic fare**.
* **When composition scheme is opted, no CENVAT credit (input credit) is allowed.**
* This is because the **partial abatement** under Notification No. 1/2006-ST (dated 01-03-2006) is conditional on **not availing CENVAT credit on inputs, input services, or capital goods**.
* So, if the agent opts for the **composition scheme**, they **cannot claim input credit** on any services or goods used in their business.
---
### 2. **Services eligible for Input Credit when NOT under Composition**
* If the air travel agent **does not opt for composition**, and pays ST at the normal rate on full value of service, **they can avail input credit** on:
* Inputs (goods used for business operations)
* Input services (e.g., telephone bills, office expenses, consultancy, advertising)
* Capital goods (office equipment, computers, etc.)
* This is allowed under the **CENVAT Credit Rules, 2004**.
---
### 3. **Air Travel Agent also Providing Other Services (like Event Management)**
* If the agent provides **multiple taxable services**, like:
* Air travel agency services (composition or normal scheme)
* Event management services (taxable under normal rate)
* The agent should **maintain separate accounts** for services under composition and normal scheme.
* **Input credit can be claimed only for services charged under normal scheme**, not under composition.
* Alternatively, agent may choose to pay ST on all services under normal rates to avail credit.
---
### 4. **Travel Agent Only Broking Event Management Service**
* If the travel agent is **only a broker between the event management service provider and client**, and does **not provide any taxable service themselves**, then:
* The **event management company charges ST** on their service.
* The broker may not have a liability to pay ST unless they are charging a separate service fee.
* If the travel agent charges **commission or fee** for broking service, that amount is taxable.
---
### **Summary Table**
| Situation | Service Tax Payable | Input Credit Allowed? |
| ---------------------------------------------------- | --------------------------------- | ------------------------------------ |
| Air travel agent opts for composition (0.6%, 1.2%) | Yes, at composite rate | No |
| Air travel agent pays normal ST on full value | Yes, at normal rate | Yes |
| Provides both air travel + event management services | Separate accounting required | Credit on normal rated services only |
| Travel agent only brokers event management service | ST payable only on commission fee | Credit if normal ST paid |
---
If you want, I can help prepare:
* A sample **accounting treatment** for mixed services
* A **note explaining CENVAT rules on input credit** for your auditors or team
Would you like me to do that?
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