Travel agent service
This query is : Resolved
13 July 2016
Mr A is running a Travel Agency. He books Railway Tickets online & makes payment through his Saving A/c. He collects cash (mostly) & cheques (in few cases) from clients & deposits in his saving account. He maintains no accounts / issues no invoices etc. Consider the value of tickets booked during year is more than Rs 10 Lacs. My question is :-
1. Whether he needs to get registered under Service Tax?
2. If yes, then in which category (accounting head)?
3. If Service Tax to be paid, on which value of ticket booked & at what rates?
Kindly share your views.
1. Whether he needs to get registered under Service Tax?
2. If yes, then in which category (accounting head)?
3. If Service Tax to be paid, on which value of ticket booked & at what rates?
Kindly share your views.
13 July 2016
In continuance of the same Mr A also books Air tickets indirectly. He is sub agent of a travel agent Mr B. Mr A keeps advance deposited with Mr B and if required by client he books ticket on the portal of Mr B. In turn Mr B pays him the commission (after TDS). Yearly commission amount being approx Rs 25000/- In this case also:-
1. Is he required to take Service Tax Reg & if yes in which category/ accounting head?
2. At what rates Service Tax to be paid if any?
Kindly share your valuable opinions.
1. Is he required to take Service Tax Reg & if yes in which category/ accounting head?
2. At what rates Service Tax to be paid if any?
Kindly share your valuable opinions.
13 July 2016
multiple posting due to net problem.
13 July 2016
Multiple posting due to net problem.
02 August 2025
Let's break down the two parts of Mr. A's situation for clarity:
---
### Part 1: Railway Ticket Booking Business
**Scenario:**
* Mr. A books railway tickets online, collects mostly cash and some cheque payments, deposits all in his saving account.
* Total value of tickets booked exceeds Rs 10 lakhs in the year.
* No proper accounts or invoices issued.
**Answers:**
1. **Is Service Tax registration required?**
* **No,** Service Tax is **not applicable on the full ticket value** because Mr. A is acting as a pure agent — collecting money on behalf of Indian Railways (which is not taxable under Service Tax).
* Service Tax liability arises only on the **commission or service charge** retained by Mr. A, **not on the gross ticket value**.
2. **If yes, category/accounting head?**
* Since no Service Tax liability on ticket booking itself, no registration is required just for booking railway tickets (unless Mr. A charges a commission or fee).
* If commission or service charge is charged, registration is needed under **Business Auxiliary Service** or **Tour Operator** service.
3. **On which value and rates?**
* Service Tax would be payable on **commission or service charges received** (not ticket value).
* Pre-GST rate was \~14% (12% Service Tax + Education Cess).
* If no commission charged, no Service Tax liability.
---
### Part 2: Air Ticket Booking as Sub-Agent of Mr. B
**Scenario:**
* Mr. A acts as sub-agent for Mr. B (a registered travel agent).
* Mr. A deposits advance with Mr. B and books tickets via Mr. B’s portal.
* Mr. B pays commission (approx Rs 25,000 annually) to Mr. A after deducting TDS.
**Answers:**
1. **Is Mr. A required to get Service Tax registration?**
* Yes, because Mr. A **earns commission income**, which is a taxable service.
* The threshold for registration is Rs 10 lakhs of taxable turnover. Since commission is Rs 25,000, below threshold, registration may not be mandatory. But if combined with other taxable services, it may be required.
2. **Category/accounting head?**
* **Commission agent business** or **Business Auxiliary Service** would be the applicable category.
3. **Service Tax rate?**
* Same as earlier, approx 14% pre-GST on commission income.
---
### Summary Table
| Aspect | Railway Tickets (Pure Agent) | Air Ticket Commission (Sub-Agent) |
| -------------------------- | ------------------------------------------- | ---------------------------------------------- |
| Service Tax Registration | Not required if no commission charged | Required if taxable turnover > Rs 10 lakhs |
| Taxable Value | Commission/Service charges only | Commission income |
| Service Tax Rate (Pre-GST) | \~14% on commission | \~14% on commission |
| Category | Business Auxiliary Service or Tour Operator | Commission Agent or Business Auxiliary Service |
---
### Additional Notes:
* Mr. A should ideally maintain proper books and issue invoices for commissions earned.
* If Mr. A’s total taxable turnover (including commission and other services) exceeds Rs 10 lakh, registration and Service Tax payment are mandatory.
* For pure agent services (like railway ticket booking without commission), no Service Tax liability arises.
---
If you want, I can also help draft a simple invoice template for Mr. A’s commission income or explain GST treatment (post 2017) for the same!
---
### Part 1: Railway Ticket Booking Business
**Scenario:**
* Mr. A books railway tickets online, collects mostly cash and some cheque payments, deposits all in his saving account.
* Total value of tickets booked exceeds Rs 10 lakhs in the year.
* No proper accounts or invoices issued.
**Answers:**
1. **Is Service Tax registration required?**
* **No,** Service Tax is **not applicable on the full ticket value** because Mr. A is acting as a pure agent — collecting money on behalf of Indian Railways (which is not taxable under Service Tax).
* Service Tax liability arises only on the **commission or service charge** retained by Mr. A, **not on the gross ticket value**.
2. **If yes, category/accounting head?**
* Since no Service Tax liability on ticket booking itself, no registration is required just for booking railway tickets (unless Mr. A charges a commission or fee).
* If commission or service charge is charged, registration is needed under **Business Auxiliary Service** or **Tour Operator** service.
3. **On which value and rates?**
* Service Tax would be payable on **commission or service charges received** (not ticket value).
* Pre-GST rate was \~14% (12% Service Tax + Education Cess).
* If no commission charged, no Service Tax liability.
---
### Part 2: Air Ticket Booking as Sub-Agent of Mr. B
**Scenario:**
* Mr. A acts as sub-agent for Mr. B (a registered travel agent).
* Mr. A deposits advance with Mr. B and books tickets via Mr. B’s portal.
* Mr. B pays commission (approx Rs 25,000 annually) to Mr. A after deducting TDS.
**Answers:**
1. **Is Mr. A required to get Service Tax registration?**
* Yes, because Mr. A **earns commission income**, which is a taxable service.
* The threshold for registration is Rs 10 lakhs of taxable turnover. Since commission is Rs 25,000, below threshold, registration may not be mandatory. But if combined with other taxable services, it may be required.
2. **Category/accounting head?**
* **Commission agent business** or **Business Auxiliary Service** would be the applicable category.
3. **Service Tax rate?**
* Same as earlier, approx 14% pre-GST on commission income.
---
### Summary Table
| Aspect | Railway Tickets (Pure Agent) | Air Ticket Commission (Sub-Agent) |
| -------------------------- | ------------------------------------------- | ---------------------------------------------- |
| Service Tax Registration | Not required if no commission charged | Required if taxable turnover > Rs 10 lakhs |
| Taxable Value | Commission/Service charges only | Commission income |
| Service Tax Rate (Pre-GST) | \~14% on commission | \~14% on commission |
| Category | Business Auxiliary Service or Tour Operator | Commission Agent or Business Auxiliary Service |
---
### Additional Notes:
* Mr. A should ideally maintain proper books and issue invoices for commissions earned.
* If Mr. A’s total taxable turnover (including commission and other services) exceeds Rs 10 lakh, registration and Service Tax payment are mandatory.
* For pure agent services (like railway ticket booking without commission), no Service Tax liability arises.
---
If you want, I can also help draft a simple invoice template for Mr. A’s commission income or explain GST treatment (post 2017) for the same!
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