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Reverse charge on air ticket bought from a foreign website?

Reena (Partner) (221 Points)

27 September 2017

We bought a return air-ticket to New York from an American website as it was the cheapest option. It was for travel related to a project we are doing. The ticket has price in US dollars. In rupees it was approximately Rs 80,000.

Do we nneed to pay GST on reverse charge? If yes, then how do we go about it. Do we need to create an invoice? And what exchange rate to use? And is it paid on the whole ticket amount?

Thanks in advance!

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9 Replies

sai tax solutions chennai (proprietor) (112 Points)
Replied 27 September 2017

if you bought the ticket from india then it is import of services and so need to pay IGST under RCM

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basanth (CA,CS (FINAL)) (102 Points)
Replied 27 September 2017

Hi,

As per my view, It is as same as import of service,

For this you need to pay the tax on RCM.

Create an invoice for the same,

Exchange rate will be the date on which you have made the payment,

It should be paid on the ticket amount.

Reena (Partner) (221 Points)
Replied 27 September 2017

Thanks. So the rate will be 5% of the whole ticket amount? We were provided the breakup as ticket price: about Rs 70,000 and "taxes and agency fees" at about Rs 10,000 (both in USD). So do we pay GST on the taxes and agency fee as well? There is no breakup of how much are taxes and how much is agency fees.

And can we claim Input tax credit for the same?

Thanks.

ASHISH PALLOD (353 Points)
Replied 27 September 2017

Its business travel and tickets booked on foreign website. And as i see comments here about GST to be paid, i have genuine query in the same subject line.

The traveler in this particular case go to America, do his/her business there, return back to India. In the meantime, during his stay in Ameeica, he pays his hotel, restaurant and taxi bills all as business expenses. All these expenses will be shown in his compani's account.

Do that company/individual need to pay GST on stay/restaurant expenses occurred in America ?

Ahmed Ali (388 Points)
Replied 27 September 2017

Mr. Aashish-
In case of Taxi charges and Hotel Accommodation Charges, the service provider is located outside taxable territory and place of supply too is located outside taxable territory. So, no question of taxability under GST.

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ASHISH PALLOD (353 Points)
Replied 27 September 2017

If the airline is foreign entity, then the place of supply of service for inbound travel to India will be outside the taxable territory, means no need to pay GST on the ticket for travel from outside of India to India , is this correct ?

Ahmed Ali (388 Points)
Replied 27 September 2017

To determine taxability of a supply, provisions relating to "Place of Supply" are to be applied in every case.

My previous reply was also based on Place of Supply provisions. It depends on case to case basis.

When travelling through aircraft, place of supply shall be place where passenger embarks on the flight. That means if you are embarking from America then place of supply will be outside taxable territory and anyways the Location of Supplier of Services is outside the taxable territory. This implies no GST can be levied on this type of service.

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Reena (Partner) (221 Points)
Replied 27 September 2017

So how do we calculate taxable service. The return ticket was Rs 80,000. Do we take the value from India to USA and USA to India as 50% each? And then pay GST on 50%? And do we take the airline fare (70,000) or also include agency fee and taxes (Rs10,000), the taxes here are US taxes.

Aslo, our firm is registered in Haryana. The flight was from Mumbai (Maharashtra). So do we mention the place of supply as Maharashtra or Haryana? Can we obtain supplies in a state where we are not registered?

Thanks in advance for your help.

Ahmed Ali (388 Points)
Replied 27 September 2017

Ms. Reena,

In simple words your ticket cost(including agency charges) of travelling from USA to India is not subject to levy of GST.

But your ticket cost (including agency charges) of travelling from India to USA is taxable under GST law. If your airlines are unregistered in GST, then they will not charge you any GST and you will be liable to pay GST under reverse charge. Here Place of Supply will be Maharashtra and Location of Supplier will be USA so at the month end raise a tax invoice on yourself and pay IGST at the applicable tax rates on Rs. 40000(if your ticket documents are not giving breakup of inward and outward journey costs).