service tax rate for Air travel Agent

Nov. 2009 RTP PCC Question

Special provision for payment of service tax in case of air travel agent
21. Explain the special provision for payment of service tax in case of an air travel agent.

Answer

21. Special provision for payment of service tax in case of air travel agent: Rule 6(7) of
the Service Tax Rules, 1994 provides that the person liable for paying the service tax in
relation to the services provided by an air travel agent, shall have the option:
(i) to pay an amount calculated at the rate of 0.6% of the basic fare in the case of
domestic bookings, and
(ii) at the rate of 1.2% of the basic fare in the case of international bookings, of
passage for travel by air, during any calendar month or quarter, as the case may be,
towards the discharge of his service tax liability instead of paying service tax at the
rate of specified service tax. The option once exercised, shall apply uniformly in
respect of all the bookings of passage for travel by air made by him and shall not be
changed during a financial year under any circumstances.
For the purposes of this sub-rule, the expression "basic fare" means that part of the air
fare on which commission is normally paid to the air travel agent by the airline.

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