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Service tax qurery

Shubham (Article Assistant) (25 Points)

22 April 2015

Sir I have a query regarding Service Tax for Air Ticket Agent. One of my client , ABC Pvt Ltd. is an Air Ticket Agent. They are purchasing ticket from IATA . IATA is charging Service Tax in the name of JN charges @ 4.944% of basic fare of Internation Ticket and at a different rate for domestic ticket. Now question arises whether client should charge service tax on the passenger bill on the commission paid by airlines to him ,if yes then kindly mention the reason. Kindly reply soon

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2 Replies

CA HAYEDAR SHAIKH (Practice ) (627 Points)
Replied 22 April 2015

Dear Shubham,

The value of taxable service is the gross amount charged by such agent from the customer for services in relation to the booking of passage for travel by air, excluding the air fare but including the commission, if any received from airline in relation to such booking.

Therefore, the value of taxable services will include the commission received by the travel agent from the airline. However, it will exclude the fare amount collected from the customer.

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Shubham (Article Assistant) (25 Points)
Replied 22 April 2015

Dear Sir,

I give one of the ticket details as per IATA Billing Statement:-

Basic fare :- Rs.43990

JN(S.Tax @ 4.944%):-Rs.2175

Other Tax:-Ts.6408

Total Amount:- Rs.52573

Commission @ 3%-Rs.1320

Discout @ 3%:- Rs.1320

Net payable :- Rs.49933

Now assume no extra commission is charged by Air Ticket Agent, then if the client charging S.Tax on Rs.1320 @ 13.20% i.e. Rs.163. Again if we take the Input Credit of JN Charges of Rs.2175 .Ultimately we don't have S.Tax Liability.

Again question arises - whether client should charge S.Tax or not?

If yes then how return will be filed???