Commission from Online Hotel booking

[Guest]

Sir,We are providing additional online booking services to hotels and acting as their agent for hotel booking sites. Our commission is the difference of commission collected from the hotels and paying to the hotel booking sites (ex:commission collected from a hotel for one booking is ₹ 200 and paid to hotel booking sites is ₹ 180, hence our net commission is ₹ 20).

Our clients are the hotels and please advice me on the service tax head and tax rates to be shown on the commission invoice.

[YAGAY andSUN]

Dear Rashid,

Since the inception of Negative List regime, Classification of Taxable Services do not have any relevance. However, for admin perspective the Revenue Department had come with 120 heads for classification with their accounting code.

According to us you may fall in following three categories, namely:-

1. Business Auxiliary Services;
2. Business Support Services;
3. Service other than 119 Services.

Rate of tax would be @ 12.36%. ( 12% +2%+1%).

Regards,

Team YAGAY and SUN

(Management and Indirect Tax Consultants)

AI Summary

Service tax classification for online hotel booking commissions: treatment under auxiliary/support/residual service categories with applicable tax. Classification concerns commissions retained by an online intermediary for hotel bookings. Although the Negative List Regime reduces reliance on specific taxable service labels, administratively services are reported under accounting heads. The activity may be classified as Business Auxiliary Services, Business Support Services, or Service Other Than 119 Services. The intermediary should charge and show the applicable tax on its commission invoices consistent with the selected classification and reporting codes.