service tax query

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achin (Querist)
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30 June 2011 Hi

I run a travel agency and have applied for service tax .
Now , I wish to know if the commission I would be earning would not exceed 10 lakhs
Do I have to still file for service tax also ,in that case do I have to pay service tax and claim refund later

U S Sharma

U S Sharma (Expert)
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30 June 2011 travel agency is broad description, you have to state the exact nature of services provided to your clients, and billing system to discuss more.

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achin

achin (Querist)
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30 June 2011 thank you very much for the reply.
We sell airline tickets and we buy the airline tickets from a supplier( iata travel agency like mmt,yatra ) as travel agents get discounted deals from them and sell it to client at a mark up/commission. All payments are cash or cheque .
Also , we do not get any commission from our supplier.

now the commission earned may not be more than 20k for next 6 months-year.I wish to know how should I go ahead
with service tax obligations and formalities

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U S Sharma

U S Sharma (Expert)
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30 June 2011 other than IATA agents service tax is not to be charged by sub agents on air tickets,

however you can submit a letter to your area service tax department, so that they do not bug you in future on this issue.

achin

achin (Querist)
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30 June 2011 sorry to be pain....

Please advise what about the profit earned after selling the air tickets to the clients ,shall I still pay service tax for the profit earned or shall I just disclose the profit as my income which would be subject to income tax

U S Sharma

U S Sharma (Expert)
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30 June 2011 its normal business profit.

though as per my understanding, the ticket cost is printed on the tickets issued by IATA agents, if u bill above it, that means u add your charges above it, which is normal business profit.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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30 June 2011 Service tax is not on your profit it is on the services rendered and charged by you. If your turnover is below the exempted turnover limit, you need not charge service tax if you have charged then you have to pay it to the credit of government. Once your turnover exceeds exempted limit then you have to charge service tax, get registration under service tax and pay it.

achin

achin (Querist)
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30 June 2011 I wish to know I would be liable to pay Service Tax once my sales crosses the exemption limit

On what basis shall I calculate the Service tax ,is it on total sales turnover or commission earned from selling the tickets.

I think I am now confused,I need to know do I need to pay service tax on commission earned ie. Sales minus payments made to supplier.

or shall I just add a service charges on which I can add service tax once my sales turnover increases above exeption limit.

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