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Service tax on Travel agents and tour operator
1. Air ticket booking by air travel agents
1.1. Air Travel agent (ATA) issues ticket from own stock /login
Two options to pay service tax (follow any one)
Option 1: Pay service tax @ 12.36% on commission + PLB + Transaction fees
If transaction fees charges then service tax @12.36% shall be payable on commission + PLB
+ Transaction fees
If only transaction fees is charges and no commission or PLB is received then service tax
@12.36% shall be payable on transaction fees
If there is no transaction fees is charged then service tax @12.36% shall be payable only on
commission and PLB
Option 2: Pay service tax on basic fare @0.618% - in case of domestic tickets or @1.236% - in
case of international tickets
Irrespective of transaction fees charged, commission received, service tax shall be paid on basic
fare - @0.618% in case of domestic tickets or @1.236% in case of international tickets
Basic fare means that part of the air fare on which commission is normally paid to the air travel
agent by the airline.
1.2. ATA buys ticket from another agent
Service tax would be applicable as stated in para 1.1 above.
If no commission is received by agent then also service tax would be payable as above.
The agent to whom the service tax is charged can get the cenvat credit of service tax paid by
him against service tax liability on commission received.

1.3. Service tax on cancellation / modification charges
On cancellation and modification charges, service tax shall be leviable as per option opted at
time of booking of tickets:
If ATA is paying service tax on basic fare option then service tax on cancellation /
modification will also have to be discharged on basic fare. In such case of cancellation /
modification, basic fare would be nil so there would not be any service tax
If ATA is paying service tax on commission then service tax on cancellation / modification
will have to pay service tax @12.36% on modification / cancellation charges charged to
customer.

1.4. VISA and Passport assistance fees
ATA gets visas directly through emabassy or visa facilitation centers (VCF) authorized by
embassies or visa handling agents which levy their service fees and service tax on their service
fees and in turn the agents charges visa fees, service charge for visa and passport:
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In such case agent would be liable to pay service tax @12.36% on total visa charges and similar
charges received from customer excluding actual statutory fees towards visa separately stated
in invoice. Agent can claim set off of the service tax paid to VCFs.

1.5. Domestic and international mediclaim policies and travel insurance by travel agents
Travel agent issues mediclaim policies and travel insurance for clients through various providers
and gets commission:
If travel agent is registered insurance agent with IRDA as per Insurance act,1938 and if the
commission is received by the said travel agent from Indian insurance company then said
insurance company is liable to pay service tax on commission paid to insurance agent under
reverse charge mechanism
If travel agent is not registered insurance agent with IRDA then any amount received for
travel insurance will be liable for service tax @12.36%

1.6. International roaming SIM cards and talk time by travel agents
Travel agents sells the SIM cards and talk time i.e. recharge coupon vouchers and may get
commission on the same or may add markup and sell:
Distributors or selling agent of SIM card or recharge coupon vouchers are exempt from
payment of service tax on the amount earned/commission received for the services of
selling rendered by them
However, if any extra charges or additional mark is added on MRP of SIM card or coupon
vouchers then service tax would be applicable on such extra charges or mark up @12.36%

1.7. Cruise booking by travel agents
1.7.1 Travel agents sell cruises and gets commission on same from master agents / ship-liner:
Such commission would be liable to service tax @12.36%
1.7.2 Travel agents sell the cruise for same price to the client or may add mark up to the price and sell
the same. In both scenario service tax liability would be as follow:
Sell cruise at same price to clients: Say, agent has sold the booking to client for Rs. 10,000
at the same price on which booking was done by travel agent then there will not be any
service tax liability, subject to invoice for the said booking by the ship-liner is in the name of
client and has been attached with the invoice
Sells cruise at markup: If travel agent sells for Rs. 11,000 to the client which was originally
booked by the travel agent for Rs. 10,000/ then in such a case the travel agent will have to
charge service tax on Rs. 1,000 @12.36% if the invoice from the ship-liner is in the name on
the client and the copy of the same is attached with invoice. However, if invoice from ship-
liner is not in the name of client then service tax on the full value of Rs 11,000 will have to
be charged by the travel @ 4.944%, if the abatement is taken.

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1.8. Domestic / International Hotel booking
1.8.1 Commission received by travel agent from hotel
If travel agent books hotel for client and hotel pays commission to agent then on such
commission agent would be liable to pay commission @12.36%
1.8.2 Service charges received by travel agent from customer
If travel agent charges service charges for booking of hotel for customer then service tax can be
paid in any of following option:
If abatement is not claimed as tour operator then pay service tax @12.36% on service fees
charged to customer for booking of hotel
If abatement is claimed as tour operator providing services solely for arranging or booking
accommodation then pay service tax @1.236% on total value of hotel charges including
service fees charged to customer. If abatement is claimed then they cannot take canvat
credit on input, input services and capital goods used for providing such service.

1.9. Service tax on the tour operator
Tours organized by tour operator within India or outside India for the Indian, service tax can be
paid in following manner:
1.9.1 On commission: Service tax @12.36% shall be payable by the tour operator on commission
received from another tour operator.
1.9.2 On service fees received from customer:
Option 1: Service tax shall be discharged @12.36% only on service charges charged to the client
towards package tour and not claim abatement.
Option 2: claim abatement on total tour package as follow:
As per notification 26/2012-ST dated 20-6-2012, service tax on tour operator is as follows:
Description of taxable service Tax to be
levied on
Percentage
of taxable
value
Conditions
Services by a tour operator in
relation to-
(i) a package tour

25% of
amount
charged
(i) CENVAT credit on inputs, capital goods and
input services, used for providing the taxable
service, has not been taken under the provisions
of the CENVAT Credit Rules, 2004.
(ii) The bill issued for this purpose indicates that
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it is inclusive of charges for such a tour.
(ii) a tour, if the tour operator is
providing services solely of
arranging or booking
accommodation for any person in
relation to a tour

10% of
amount
charged
(i) CENVAT credit on inputs, capital goods and
input services, used for providing the taxable
service, has not been taken under the provisions
of the CENVAT Credit Rules, 2004.
(ii) The invoice, bill or challan issued indicates
that it is towards the charges for such
accommodation.
(iii) This exemption shall not apply in such cases
where the invoice, bill or challan issued by the
tour operator, in relation to a tour, only includes
the service charges for arranging or booking
accommodation for any person and does not
include the cost of such accommodation.
(iii) any services other than specified
at (i) and (ii) above.
40% of
amount
charged
(i) CENVAT credit on inputs, capital goods and
input services, used for providing the taxable
service, has not been taken under the provisions
of the CENVAT Credit Rules, 2004.
(ii)The bill issued indicates that the amount
charged in the bill is the gross amount charged
for such a tour.

Tour operator means any person engaged in the business of planning, scheduling, organizing,
arranging tours (which may include arrangements for accommodation, sightseeing or other
similar services) by any mode of transport, and includes any person engaged in the business of
operating tours.
Package tour means a tour wherein transportation, accommodation for stay, food, tourist
guide, entry to monuments and other similar services in relation to tour are provided by the
tour operator as part of the package tour to the person undertaking the tour.