Tour Operators to Business Auxiliary Services

[RAHUL DAS]

NEED URGENT REPLY

Dear All,

Iam working in a Tour Operator Company.

As there is a change in Service Tax rate, we have lost our customers due to high cost. and our business was in a very bad condition.

And against this, our management has decided to change our service tax category as tour operator to business auxiliary services.

So, now we will be charged 15% service tax on our markup.

Kindly, provide advice on the above change and how it will affect our business (as we are accredited tour operators of both kerala govt and india govt.)

Hopefully,

Rahul Das.

[KASTURI SETHI]

Dear Querist, You cannot change classification/category of service. Definition s of services have been omitted w.e.f. 1.7.12. Accouning codes of various services under erstwhile categories are for statistical purpose. Service Tax is to be paid on the nature of service as defined under Section 65 B (44) of the Finance Act and various notifications providing abatements/benefits of RCM/Service portion. You are to avail abatements/RCM/other benefits as per notifications. You have no volition to waive abatements or RCM.

[Ganeshan Kalyani]

I fully agree with Sri Kasturi Sir 's view. One cannot change the nature of service to avail any kind of benefit. This will cost you heavy in future. Thanks.

[DR.MARIAPPAN GOVINDARAJAN]

If GST comes into effect it is expected that the tax rate for services up to 18%.

AI Summary

Classification of service determines tax liability and cannot be changed to secure abatements or reverse charge relief. Classification of services cannot be altered to obtain favorable tax treatment; tax liability is determined by the intrinsic nature of the service as defined in the statutory definition. Tour operators cannot reclassify as business auxiliary services to claim different abatements or reverse charge exemptions; statutory abatements and RCM benefits apply only as provided in notifications and cannot be waived or converted by the taxpayer.