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:

Condition:

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 ca.gauravagrawal@gmail.com, 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.

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16 responses to “Tour Operator service-Amendment in abatement & CENVAT allowed”

  1. PAWAN ARORA says:

    we are going on a foreign tour(Europe) with tour operator arranging hotel bookings and travelling abroad package (excluding air fare for onward and return journey by air). The tour operator says 9% service tax is now applicable on the total package amount as per the recent govt notification. Is this correct Or is there any abatement allowed.

  2. Srilekha says:

    how much tax will be there on hotel booking and transport only?

  3. varun says:

    hello,

    the notification only speaks of tours involving hotels and transportation, which means a package. It does not speak specifically of hotels. if you look at service tax notification previously, they treat a package (hotel + transportation) and hotel only differently. So how did u interpret that abatement on hotel booking only has also been reduced to 60%.

  4. NITIN says:

    ALL INPUT SERVICE MEANS COMMISSION PLUS SERVICE TAX CHARGED BY MAKE MY TRIP ITS MEANS CENVAT CREDIT OF SERVICE TAX PAID ON COMMISSION IS AVAILABLE FOR CENVAT CREDIT.

  5. Rajivgupta says:

    I am an authorized agent of some hotels of Manali and sell their room booking in Delhi. I gets the payment in my bank account from customer and later I pay to Hotel after my commission 5%. Will I have to pay service tax on 60% of total money I have collected from customers.

  6. Kamal Singh says:

    can I have the details of input services available under tour operator category under new service tax amendments

  7. Kcjain says:

    Booked a14 day Europe tour thru Thomas Cook( tour dates 17/5-31/5/17) – cost 241000 + 4.5% service tax = 252000. They’re threaning us to pay full today, otherwise 9% Service tax on full amount would be charged from tomorrow onwards. An additional burden of 10800 per person. I doubt this.
    Pl clarify the actual position

  8. k.chandrahasa says:

    we are going on a foreign tour with tour operator arranging air and land package. The tour operator says 9% service tax is now applicable on the total package amount asper the recent govt notification. Is this correct Or is there any abatement allowed. Since air ticket purchased by him is already levied with tax, once again levying itto the customer is justified or not?

  9. ganesh mahakal says:

    Hello Sir,
    Whether any rate changes in Hotel booking and car hiring ?

  10. PRIYA RASTOGI says:

    Taxable Value increased but CENVAT of all input services allowed – here ALL means any service or services related to tour operator only.

  11. Ashwani Kumar says:

    can you give any reference where i could see CENVAT credit of all input services will be allowed?

  12. Sanjeev Swain says:

    The article is really good and thanks for clearing my doubt

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