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Abatement Rate

Sreejesh V K (ICMA Final Student) (147 Points)

26 March 2011

HI My Dear Friends,

Any of you know what is the rate of abatement for a travel & tour operator while collecting service tax on his receipts? further he is eligible for refunds or not???

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3 Replies

Pankaj Arora (Learner) (3134 Points)
Replied 26 March 2011

Abatement available to Tour Operator Services are as follows

Tour Operator Service,

(A) Services provided by a tour operator in relation to a package tour Abatement 75%

(B) Service is provided solely for arranging or booking accommodation for any person in relation to a tour. Abatement 90%

(C) For services other than package tour and booking of accommodation Abatement 60%

Notification applicable to Tour Operator Services & Travel Agent Services

[Please Refer: Service Tax Notification No. 38/2007-ST dated 23-08-2007]

[Please Refer: Service Tax Notification No. 15/2007-ST dated 04-04-2007]

In Travel agent Services, Service Tax has to be calculated on Commission received.

Pinky Agarwal (Chartered Accountant) (426 Points)
Replied 26 March 2011

Services provided or to be provided to any person, by a tour operator in relation to a package tour is required to pay service tax on 25% of the value of service provided. The ‘package tour’ is a tour wherein transportation, accommodation for stay, food, tourist guide, entry to monuments and other similar services in relation to tour are provided by the tour operator as part of the package tour to the person undertaking the tour. For this purpose the bill should indicate that it is inclusive of charges for such a tour;
Services provided or to be provided to any person, by a tour operator in relation to a tour, if the tour operator is providing services solely or arranging or booking accommodation for any person in relation to a tour is required to pay service tax on 10% of the value of service provided.

The conditions stipulated for this purpose are as follows:

The invoice, bill or challan issued should indicates that it is towards charges for such accommodation; and
This exemption shall not apply in such cases where the invoice, bill or challan issued by the tour operator, in relation to a tour, only includes the service charges for arranging or booking accommodation for any person and does not include the cost of such accommodation.

Services other than services specified above provided or to be provided to any person by a tour operator in relation to a tour is required to pay service tax on 40% of the value of service provided. The bill issued for this purpose should indicate that the amount charged in the bill is the gross amount charged for such a tour.