ST on Travel Bills

[sathyanarayanan kasinathan]

Company 'A', that is into travel management(No tours or packages) books tickets, and charges commission for the same. How is service tax calculated on the above? How is service tax calculated in cases where the company books a round trip, starting point and ending point being India?

[Rama Krishana]

In case of travel agent, government has realized the difficulty and gave an option to pay service tax on gross bill amount at composite rate. You may refer to rule 6(7) of the service tax rules, 1994 which stipulates that, he can pay 0.6% on the basic fare in lieu of 10% on commissison amount.

AI Summary

Service tax on travel agent commissions: option to pay composite rate on basic fare instead of tax on commission. Travel agents who book tickets and charge commission may elect to compute service tax by applying a composite rate to the basic fare instead of taxing the commission income; this statutory option, cited in the service tax rules, simplifies compliance by substituting a single levy on the basic fare for tax on commission receipts.