Tag Archives: Service Tax

Disappointed by the latest circular by Emirates to cut down commissions to one per cent, Rajat Bagaria, Committee Member, The Travel Agents Federation of India (TAFI), says, “Airlines should be encouraging their travel agency sales force rather than disarming them. Agents always considered EK as an agent-friendly airline, and we rewarded the airline with load factors from all the cities. However, this move brings them at par with other airlines. This comes at a time when the summer season is about to begin, and when we are already reeling under the Service Tax amendment impact. Coupled with the reduced commission, the web disparity, and direct promotions to the frequent fliers and corporates, the margins of the agents will be drastically hit. I hope they have call centres well equipped to handle customer calls and complaints.”

With a view to sensitise stakeholders about the new GST scheme that is to replace a multitude of indirect taxes currently being levied, the Service Tax zone of Kolkata has flagged off a mobile help centre. A network of trained officers will tour the city of Kolkata, conducting seminars, to help stakeholders transition from the Service Tax and Central Excise schemes to the GSTN (GST Network), a front-end system developed by the Government of India as a single interface for the GST roll-out. New registrants will be able to register on-the-spot.

The Outbound Tour Operators Association of lndia (OTOAl) has written to Union Finance Minister Arun Jaitley regarding the recent amendment in Service Tax, which would impact outbound tour markets. Explaining how the agents will not be given any input credit on the tax they pay, OTOAI has said that this would hamper the growth of the tourism industry. OTOAI has urged the finance minister to consider that the abatement available to tour operator should be amended to provide a choice to the tour operator to opt for a lower abatement along with CENVAT credit on input services or opt for a higher abatement without claiming the CENVAT credit on input services. The letter undersigned by OTOAI President Guldeep Singh Sahni reads, “As the actual margin earned by the tour operators is only 3 to 5 per cent, the increase in taxable value to 60 per cent will significantly negatively impact the sector and increase the cost of outbound tours.”

Ankush Nijhawan, MD, Nijhawan Group, “I think this increase in service tax is just the trailer for GST to set in. The government has made a soft opening to what GST will have in store at 14-18 per cent. Given this move, the tourism and hospitality industry has to brace itself for high tax rate when GST will be implemented. The prices will shoot up in short term and the effect will be seen on outbound as well as domestic travel. The increase in prices of holidays sold as packages will result in travellers to pay more and the business will be impacted temporarily. However, we need to wait for what GST has in store when it is implemented in June this year.

According to a recent ruling, starting January 22 2017, tour operators will have to pay a service tax on 60 per cent of the amount they bill the customer. The move might make the cost of the tours to go up by 10-15 per cent. Before this, tour operators had to pay service tax on 25 per cent of the bill amount if they offered a packaged tour, and in case of offering their service for booking a hotel as part of a tour, they paid service tax on only 10 per cent of the bill amount. For any other tour-related service, the service tax was on 40 per cent of the bill amount.

According to a recent judgement by the Delhi High Court, there cannot be any audit of assesse records by the Central Excise and Service Tax Department and struck down Rule 5A(2) of Service Tax Rules as ultra vires to the Finance Act, 1994. It is a general practice of Service Tax Department to conduct audit of service tax assessee for last five years by deputing their own officers of the rank of inspector and Superintendents. Service Tax Department also seeks voluminous details and seeks information in self-specified format/annexures of about 32 pages, which are not prescribed under the law. Service Tax Department without assigning any reasons and routinely conducts audit even when it is not prescribed under the law and not conducting special audit. This comes as a huge relief for travel companies who have faced instances of audit by service tax department.

Due to changes in the Service Tax structure, VFS service fees and VAS service charges for Australia Visa Application will be revised with effect from June 1, 2016.The revised primary applicant fee is Rs. 1006 (from earlier Rs. 966) and additional applicant fee is Rs. 714 (from earlier Rs. 676) . Charges have also been revised for Photo booth Rs. 154, Return Courier Rs. 307, ETA Assisted terminal Rs. 190, Assisted Form Filling Service Rs. 190, 2 way Courier/drop off courier Rs. 616 and Premium Lounge Rs. 2048.