Service tax on air transport

Can anyone clarify the Service tax levy on international air transport of passengers in  business/first class ???are there any exemptions? what is the effective rate?? What is that YQ and YR charges. What is the treatment of those charges?

Eg: M/s ABC Airlines carried 1000 passangers embarking from Delhi to USA in Business Class. Gross Value per ticket Rs 4950. YQ & YR Charges Rs 2000 incl in the Gross value.? What is the Amt of ST??
 thnx in advance..

Replies (1)

As stated in theLetter D.O.F. No. 334/1/2010- TRU, dated 26th February 2010, in Budget 2010, service tax on transport of passengers by air was extended to cover all domestic and international air passengers embarking in india with effective tax rates as given below:

(a) 10% (current rate of service tax) of the gross value of the ticket  or rupees one hundred per journey,which ever is less, for passengers travelling in aby class within India.

(b) 10% (current rate of service tax) of the gross value of the ticket  or rupees Five hundred per journey,which ever is less, for passengers embarking in India for an international journey in economy class.

The aforesaid rates are subject to non-availment of CENVAT credit.

All charges except statutory levies if any mentioned in a ticket is to be taken as gross value of the ticket for this purpose.

The scheme of tax on passengers embarking i india for an international journey in higher classes (i.e. other than economy class) remains unchanged.

Airlines were found  collecting fare from passengers under various head such as basic fare, YQ charges, YR charges etc (YQ and YR is the name given for collecting charges) . and were paying service tax only on basic fare whereas as per service tax law they were required to pay service tax on the gross amount charged for providing taxable service.

In your case

Service Tax payable

10% of 4950 = 495 or500 which ever is less

i.e.495 is payable as service tax.

 

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