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Cancellation of package tour.

Yogesh Baburao Panchal (Chief Manager) (35 Points)

13 April 2016

If guest cancel tour, does cancellation charges liable to tax? if yes, at what rate (with or without abatement rate)?

If guest has paid advance amt on which we have paid service tax, shall i pay additional service tax on cancellation amount else i can adjust service tax paid earlier?

Regards

CA Yogesh Panchal

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3 Replies

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 13 April 2016

cancellation charges should not be liable to s.tax because no service has been provided. if the guest had paid advance amount inclusive of s.tax, then adjust cancellation charges from such amt. and refund balance to the customer.
now if the s.tax collected in advance amt. has been deposited to govt. a/c then adjust the excess s.tax paid in the following month.

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Shubham Gupta (Business Consultants) (2077 Points)
Replied 13 April 2016

Cancellation Charges fall within the ambit of Section 66E (e) of Finance Act, 1994 i.e. Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation or to do an act, these charges will attract Service Tax.

Yogesh Baburao Panchal (Chief Manager) (35 Points)
Replied 14 April 2016

Thanks for your reply.

However, i have laready paid service tax at the time of advance receipts and out of the advance receipt, i am forfieting some amount, so am i liable to pay service tax at the time of cancellation?

If yes, what is rate of service tax, is it after appying abatement or full rate i.e. 14.5%.

Regards

CA Yogesh Panchal