Should we charge Service Tax on Basic Air Fare or Total Air

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Anurag (Querist)
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19 April 2009 For last couple of years, we have been charging Service Tax on Total Air Fare (of Domestic/ International Flights).

Now we have come to know that Service Tax is to be charged only on the BASIC AIR FARE. After checking with my associate Agents I realised that they are changing Service Tax/ Cess on Basic Air Fare (as per Service Tax Rules).

Kindly advise if I should also charge Service Tax on Basic Air Fare.

If Yes, would I be questioned by Service Tax Deptt. as to why we have changed our practice and started charging on Basic Air Fare.

Kindly Advise.

Regards,

Anurag

Dayal

Dayal (Expert)
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19 April 2009 Why not check the provisions wherein Under sub-rule (7) of rule 6 as amended by Not. No. 17/2006 ST an air travel agent is can discharge Service Tax at the rate of 0.6% of the basic fare in case of domestic booking and @1.2% of the basic fare in the case of international tickets towards discharge of his Service Tax liability instead of paying tax the tax at the prevailing rates.