Sub agent of an iata agent(air ticketing)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 August 2011 HI,

I AM AN SUB AGENT I BUY INTERNATIONAL AIR TICKETS FROM MY IATA AGENT AND SELL IT TO MY CUSTOMERS WITH A SMALL PROFIT MARGIN. I DON'T GET ANY COMMISSION FROM MY AGENT.PAYMENT TO IATA AGENT IS MADE BY ME THROUGH MY BANK ACCOUNT.(1) DO I COME UNDER THE SERVICE TAX NET.(2) DO I HAVE TO CHARGE SERVICE TAX TO MY CUSTOMERS, IF YES THEN HOW MUCH % AS ST ON INTL AIR TICKET IS 515 MAX.

U S Sharma

U S Sharma (Expert)
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17 August 2011 you are not entiled to charge any service tax on airfreight, but if you add your commission to your bills, such commission is subject to service tax subject to exemption limit of 10L

Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2011 sir, am i eligible for ST on the total amount i collect from my customer or the commission i charged over and above the airfare that i receive from my IATA agent.If on the total amount then is it on the basic fare or the total value of the ticket.

Querist : Anonymous

Querist : Anonymous (Querist)

U S Sharma

U S Sharma (Expert)
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17 August 2011 on air tickets service tax liability is limited to IATA agents only, and only they can pay the same, sub agents dont have any role on it, but if they charge any service fees over it, then such service fees is liable for service tax separately.

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Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2011 on what amount i have to charge service tax to my customer (1) the total invoice amount or the service fees. please give an example for better clarification.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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25 July 2025 Hey! Here’s a clear explanation based on your situation as a sub-agent of an IATA agent selling international air tickets:

1. **Are you liable to pay Service Tax?**
As a sub-agent, you **do not pay Service Tax on the air ticket fare itself** because the liability to pay Service Tax on air tickets is **only on the IATA agent** (the principal agent). So, you as a sub-agent don’t charge Service Tax on the base fare or ticket price.

2. **What if you charge a commission or service fee?**
If you add any **service fee or commission** over and above the air ticket price, that service fee is treated as your own taxable service income.
You have to charge Service Tax **only on the service fee or commission you earn**, not on the entire ticket amount.

3. **How much Service Tax to charge?**
Service Tax rates have changed over years, but as per your example timeline (2011), the standard Service Tax rate was about 10.3% (including education cess). Today, GST applies, but if you’re specifically referring to old service tax rules, you should apply Service Tax on your service fee at the applicable rate at that time.

4. **Example:**
Suppose the air ticket base fare (which you pay to IATA agent) = ₹50,000
You add your service fee = ₹2,000
Total amount charged to customer = ₹52,000

You charge Service Tax on ₹2,000 (service fee), not on ₹52,000.
So, Service Tax = 10.3% of ₹2,000 = ₹206 (approximately)

5. **Collection and payment:**
You collect ₹52,000 from your customer, pay ₹50,000 to IATA agent, and keep ₹2,000 + Service Tax charged. You then pay Service Tax on the ₹2,000 service fee portion to the government.

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**Summary:**

* Service Tax on air ticket fare = IATA agent’s responsibility only.
* You pay Service Tax only on the commission or service fee you charge.
* Charge Service Tax on the service fee only, not on the total ticket amount.

If you want, I can help you draft a sample invoice format showing this breakdown. Would that be helpful?

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