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         Air Travel Agents
   
 
Q.1 Who is an Air Travel Agent ?
Ans.  Air Travel Agent is a person engaged in providing any service connected with the booking of passage for travel by air.
Q.2 What is taxable service for an air travel agent?
Ans.  In case of air travel agent, the taxable service is the service provided to the customer in relation to the booking of passage for travel by air.
Q.3 What is the value of taxable service in case of air travel agent?
Ans. In case of air travel agent, the value of taxable service is the gross amount charged by such agent from the customer for services in relation to the booking of passage for travel by air excluding the air fare but including the commission, if any received from airline in relation to such booking.

The air travel agents receive certain commission for domestic tickets and for international tickets from the airlines. The details of the commissions payable by the airlines is indicated in the agency agreement entered into between the air line and the air travel agent. The travel agent files a fortnightly return to the airlines indicating the details of tickets booked, the fare collected, the commission earned along with other particulars. After adjusting the commission, he remits the balance amount to the air lines. This fortnightly return would be the basis for assessment of Service Tax in respect of air travel agents. However, an option has been given to the air travel agents to pay the Service Tax at the rate of 0.25% of the basic fare in the case of domestic tickets and 0.5% of the basic fare in the case of international tickets towards discharge of their Service Tax liability instead of paying tax at the rate of 5% on the actual commission received from the air lines. The basic fare is defined as that part of the fare on which commission is payable by the air lines. 
Q.4  What is the procedure to be followed for getting refund of Service tax in cases where the ticket booked is cancelled at a later stage?
Ans Cancellation or modification of tickets is a common and frequent feature in air travel. The air travel agent in his fortnightly return gives the particulars of tickets cancelled or modified and adjusts the commission accordingly subject to final approval by the airlines. Since the commission is adjusted automatically and the Service Tax is paid on the net commission received, the question of separately claiming refund of Service Tax may not arise. 
Q.5  Is the service provided by Air Travel Agent in relation to the booking of passage for travel by air to U.N or International organisation or the Diplomatic Missions exempted from payment of service tax?
Ans. 
 
 
Yes. The service provided by an air Travel Agent in relation to the booking of passage for travel by air to UN, other international organisation as well as certain specified Diplomatic Missions are exempted from payment of Service Tax. ( Refers Notification No. 51/98 Service Tax dated 15.06.98)
Q.6 If tickets are issued against international credit card, whether the Air Travel Agent is required to pay Service Tax on such services provided to the International Card holder irrespective of the fact whether he or she is an Indian, NRI or Foreigner ?
Ans. Card, they would be responsible for payment of the Service Tax to the Govt. irrespective of the fact the receiver of the service, i.e international credit card holder is an Indian or NRI or Foreginer. 
Q.7 Would Service Tax be chargable on modification charges recovered by the Air Travel Agent?
Ans. The value of taxable service in relation to service provided by an Air Travel Agent to a customer is the gross amount charged by such agent from the customer. The modification charges recovered by the Air Travel Agent are included in the gross amount charged from the customer. Hence, these are chargeable to service tax.
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