The Govt. of India vide Notification No. 04/2017-ST dated 12.01.2017 (w.e.f. 22.01.2017) has amended abatement available to tour operators vide notification No. 26/2012-ST dated 20.06.2012 also amended by 08/2016-ST dated 01.03.2016.
W.e.f. 22.01.2017, the abatement of 40% of gross amount charged for any tour operator service will be available. Therefore, w.e.f. 22.01.2017, service tax will be charged on 60% of the gross amount charged for any tour operator service. However restriction on availment of CENVAT Credit of input services has also been removed. Therefore, now CENVAT Credit of input services can be availed. The condition for availing the benefit of abatement is also provided as:
1) CENVAT credit on inputs and capital goods used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004
2) The bill issued for this purpose indicates that it is inclusive of charges of accommodation and transportation required for such a tour and the amount charged in the bill is the gross amount charged for such a tour including the charges of accommodation and transportation required for such a tour.
Comparative analysis of Change in abatement in Tour Operator service
|S. No.||Tour Services||Before 22.01.2017||W.e.f. 22.01.2017||Impact|
|(i)||a tour, only for the purpose of arranging or booking accommodation for any person
|Taxable Value 10% (CENVAT Credit of only tour operator bills allowed)||Taxable Value 60% (CENVAT Credit of all Input services allowed)||Taxable Value increased but CENVAT of all input services allowed|
|(ii)||tours other than (i) above||Taxable Value 30% (CENVAT Credit of only tour operator bills allowed)||Taxable Value 60% ( CENVAT Credit of all Input services allowed )||Taxable Value increased but CENVAT of all input services allowed|
(Author is a Service Tax Consultant and can be reached at firstname.lastname@example.org, Mob: +91 9911224940)
Disclaimer: The views expressed herein above are solely author’s personal views/opinion. This is an informational article and should not be considered as legal opinion. The possibility of any errors and omissions in the article cannot be ruled out.