Service tax rate

What is the value of taxable service in case of air travel agent?

In case of air travel agent, 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.

The air travel agents receive certain commission for domestic tickets and for international tickets from the airlines. The details of the commissions payable by the airlines is indicated in the agency agreement entered into between the air line and the air travel agent. The travel agent files a fortnightly return to the airlines indicating the details of tickets booked, the fare collected, the commission earned along with other particulars. After adjusting the commission, he remits the balance amount to the air lines. This fortnightly return would be the basis for assessment of Service Tax in respect of air travel agents. However, an option has been given to the air travel agents to pay the Service Tax at the rate of 0.25% of the basic fare in the case of domestic tickets and 0.5% of the basic fare in the case of international tickets towards discharge of their Service Tax liability instead of paying tax at the rate of 5% on the actual commission received from the air lines. The basic fare is defined as that part of the fare on which commission is payable by the air lines.