Service Tax on Travel agents, tour operator and Room Booking
Air ticket booking by air travel agents
When an Air Travel Agents books a Ticket for you, he charges a commission for booking the air tickets. As he has provided you a service by booking the ticke
ts on your behalf, Service Tax would be levied on the Commission charged by him for booking the Tickets @ 12.36% (Full Rate) on the commission + Other fees charged.
Other wise
If Air Travel Agent does not charge any commission from the person booking the air tickets and charges a commission from the Airline whose ticket has been booked. In such cases, the Commission of the Air Travel Agent is not disclosed in the Invoice and only the Air Ticket Fare is disclosed in the Invoice.
In such cases where the Commission of the Air Travel Agent is not disclosed in the Invoice and only the Air Ticket Fare is mentioned in the Invoice, the Service Tax would be levied at the rates mentioned below:-
| In case of Domestic Bookings | 0.618% of the Basic Fare |
| In case of International Bookings | 1.236% of the Basic Fare |
Irrespective of transaction fees charged, commission received, service tax shall be paid on basic fare .
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 as above.
Cruise booking by travel agents
Travel agents sell cruises and gets commission on same from master agents / ship-liner:
Such commission would be liable to service tax @12.36%
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.
Domestic / International Hotel booking
Commission received by travel agent from hotel @ 12.36%
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%
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 CenVAT credit on input, input services and capital goods used for providing such service.
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:
On commission: Service tax @12.36% shall be payable by the tour operator on commission received from another tour operator.
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:
The rate of Service Tax on Tour Operators is as follows
| Type of Service | Abatement allowed | Taxable Portion | Effective Rate of Service Tax (incl. Cess) |
| 1. Services by a Tour Operator in relation to a Package Tour | 75% | 25% | 3.09% |
| 2. Services solely of arranging or booking accommodation for any person | 90% | 10% | 1.236% |
| 3. Service provided by a Tour Operator other than the 2 types of Services specified above. | 60% | 40% | 4.944% |
Following are not to be taxed while providing services
Services provided to the following persons are fully exempt:
United Nations or any such specified International Organization
Office of a foreign diplomatic mission or consular post in India
Personal use or for the use of family members of diplomatic agents or career consular officers posted in a foreign diplomatic mission or consular post in India
Budget 2014 has exempted Service Tax on Services provided by Indian Tour Operators to Foreign Tourists in relation to a tour wholly conducted outside India is exempted from the levy of Service Tax.
However, Service Tax would continue to be levied on Tour Operators in all other cases except the case specified above which has been specifically exempted in Budget 2014.
Terms Used Above:
Accommodation Services:- Room Rental Services, giving the services of booking of the room night in any hotel.
Tour operator:- 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:- 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.
Air Travel Agent:- Any person engaged in providing any service connected with the booking of passage for travel by air. Any service provided or to be provided to any person, by an air travel agent in relation to booking of passage for travel by air is a taxable service.
CA Deepak Agrawal 
that means if a travel agent has opted to pay s.tax on basic fare, and ticket is cancelled since there is no existence of basic fare there is no liability of s.tax on canc charges collected by agent.
Thank you for the query
there are two methods which service providers follow in this cases:
1. Retain or recover the Service Tax Portion in case of the cancellation of the booking.
2. treat the same as the sales return and take the cenvat of the same.
Very useful information shared.
thanks and keep reading all the posts
when service tax liablity arises in the case of:
1 on the date of booking, on the date of check in, on the date of payment
2 in this situation, if there is part payment
what are the tax impictions if tour operator gets ticket booked by agent???.
Hi, how are the service tax rates for tours (3.09, 1.236, 4.944) by a travel agent to be levied and calculated when
1. Service tax amount is separately shown in the invoice
2. Service tax amount is not separately shown in the invoice