SERVICE TAX LIABILITY

[DEEPAK GUPTA]

Respected  Sir,

We are engaged in business of Air Travel Agents and are regd. under Service Tax as

such. We are IATA accredited agents and normally sell air tickets on our stock.  We also

procure some tickets from other IATA agents and sell further to sub agents. Our business

involvcs following transactions :-

1)      SALES ON OUR OWN STOCK  :-

a)      We are presently paying service tax @ 12.36% on commission received from BSP on fortnightly basis. We have been advised  that we should pay @ 12.36/112.36*BSP Commission . Kindly confirm if this version is correct.

b)      We receive PLB commission from Airlines on achieving yearly targets. We are properly paying Service tax @ 12.36/112.36 on receipt of PLB.

c)      We also receive some CRS commission from service providers like  Galileo  whose software, we are using. We are not providing any service to them. No tax is presently being paid.on this commission.

2)      SALES ON TRADING BASIS  :-

                 We outsource tickets for some business from other IATA agents. These

agents charge service tax in their  invoices. A specimen of such invoice is as follows

      IATA BSP AGENT BILLING TO MY COMPANY         

              Supose Basic fare &Taxes                 10000                                        

               Less Std. Commn+PLB/Dis. (-)           1000           

                                                                                  9000         

              Service Tax                                               124    (12.36% On Rs. 1000/-)                                                                                            

                Net amount I have to pay to              9124                     

                IATA BSP Outsource Agent                                  

 

We make a small profit of say Rs. 300/- on this purchase and issue the following

invoice to our to our sub agent/Agent.

    SAME INVOICE FROM MY COMPANY TO OTHER CO./Sub Agent

           Suppose Basic fare &Taxes            10000                               

           Less Std. Commn+PLB/Dis. (-)           700

                                                                            9300 

                Service Tax                                          87   (12.36% On Rs. 700/-)

 

          Net amount I have to Receive            9387          

         From Sub Agent/customer   

 We have neither taken any credit of Rs. 124/- paid on purchase nor paid the

amount of Rs. 87/- charged to the buyer.

a)      Kindly let us know the legal position on each type of transaction.

b)     Whether we can issue SEVICE TAX PAID BILLING  ----- or is it mandatory

      to show SERVICE TAX on invoices.

       Thanks & regards,

Jatinder Sharma

[DR.MARIAPPAN GOVINDARAJAN]

Whether you have got clarified? If not please inform.

AI Summary

Service tax on commission: liability and invoice disclosure obligations apply for air travel agents selling tickets and bonuses. Service tax applies to commission receipts from BSP and to PLB receipts from airlines; CRS provider commissions are commission income requiring taxability analysis. For outsourced ticket purchases, supplier-charged service tax has been paid but no input credit has been claimed and no service tax has been separately remitted to buyers on resale. Core issues include correct taxable base for commissions, entitlement to input tax credit on outsourced purchases, and whether service tax must be shown separately on invoices or may be represented as 'SERVICE TAX PAID.'