Skip to main content

Service tax blow for on line travel players

By
Domestic hotel and tour aggregatorssuchasOYO Rooms, EaseMyTrip and MakeMyTripwereexpectingtax reliefintheBudgettobepresented on February 1. But the mood has turned sombre, with the finance ministry deciding to imposeservicetaxonwhatthey receivefromcustomersandnotjust thecommissionearnedfromhotels andothers.
Inaquietmove,the Central Board of Excise and Customs has amended the service taxrules to clarify this because there was ambiguity on the point.The changed rules came into effect on January 22.
The aggregators said their associations had taken up the matter with the ministry because this step would make the muncompetitive vis-à-vis international tour and travelplayerssuchasTravelocity, ExpediaandPriceline.com,which donotpayservicetaxinIndia.
The rates of service tax depend on whether aggregat or soffer tour packages,hotelrooms,hotelrooms withfood,etc.
The current practice is that most customers pay the entire amount to aggregators because the latter give discounts invarious forms.
Explaining the rules, Naveen Wadhwa of Taxmann said if a customerpaid~1,200toMakeMyTrip, thesumwouldbetaxed.Now,if there is a commission of Rs.300 toMakeMyTripand Rs.900goesto the hotel providing the room, aggregatorswantthetaxonRs.300.
However,ifacustomersplitup hisbillandpaid~900tothehotel directlyand~300totheaggregator, theaggregatorwouldpaythetaxon ~300,Wadhwasaid.But,mostoften thisisnotthepractice.Inthiscase, thehotelwillalsonotbetaxed becausethereisanexemptionfor roomrentlowerthan~1,000.
Theissuecameintofocuswhen MakeMyTripVice-President(Finance) MKPillaiwasarrestedforalleged taxevasionlastyear,andthematter is sub-judice intheSupremeCourt.
In the case of tour packages,there will be an a batement(proportiondeductedfrom thebill)of 40 percent,which means the service tax will be nine percent.If only hotel rooms are provided,there will be no abatement and the tax is 15 percent.If hotelrooms and food are provided,there will be an abatement of 60 percent in the food bill,which means the service tax will be six percent on food charges.
Nishant Pitti,chief executive officer and founder of Ease My Trip,said:“The buying cost for our customers has been raised by nine percent.We are passing this on to customers.Inthisenvironment wewillnotbecompetitivevis-à-visforeign onlineserviceproviders.” Pittisaidhotelsbilledaggregatorsthe entireamount,whichincludedtheservice tax.
He said customers would find foreign players more attractive than their Indian counter parts.
The Travel Agents Federation of India andTravel Agents Association of India have taken up the matter with the finance ministry,according to Pitti.
Business Standard New Delhi,27th January 2017

Comments

Post a Comment

Popular posts from this blog

Budget: Startup sector gets new Fund of Funds, FM to allocate Rs 10K cr

By
  The Indian startup sector received a boost with Finance Minister Nirmala Sitharaman announcing the establishment of a new fund of funds (FoF) in the Budget 2025. The minister unveiled a fresh FoF with an expanded scope, allocating Rs 10,000 crore. The initial fund of funds announced by the government with an investment of Rs 10,000 crore successfully catalysed commitments worth Rs 91,000 crore, the minister said.   “The renewal of the Rs 10,000 crore commitment to the Fund of Funds for alternative investment funds (AIFs) is a significant step forward for the Indian startup and investment ecosystem. The initial Rs 10,000 crore commitment catalysed Rs 91,000 crore in investments, and I fully expect this fresh infusion to attract an additional Rs 1 lakh to Rs 1.5 lakh crore in capital,” said Anirudh Damani, managing partner, Artha Venture Funds.   Damani further added that this initiative will provide much-needed growth capital to early-stage startups, further strengthenin...
Post a Comment
Read more

After RBI rate cut, check latest home loan interest rates of top banks for loans above Rs 75 lakh

By
  The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points from 6.50% to 6.25% in its monetary policy review as announced on February 7, 2025. After the RBI repo rate cut, banks such as SBI, Canara Bank, PNB, and Union Bank among others have cut their repo linked lending rates. Most other banks are also expected to cut their lending rates in line with the RBI rate cut. After banks cut their lending rates, their home loan borrowers will have to pay less interest. Normally, when a lender cuts the lending rate, borrowers get two options: Either to go for a reduction in EMIs or reduce the tenure of the loan. The second option will help the borrowers clear their home loan outstanding faster. In case, the borrower goes for reduction in EMI then the lower lending rate of the lender would mean lower Equated Monthly Installment (EMI) for borrowers.   EMI is the amount you will pay on a specific date each month till the loan is repaid in full.A repo rate-linked home ...
Post a Comment
Read more

GST collections rise 9.9% to exceed Rs 1.96 trillion in March 2025

By
  Gross GST collection in March grew 9.9 per cent to over Rs 1.96 lakh crore, government data showed on Tuesday. GST revenue from domestic transactions rose 8.8 per cent to Rs 1.49 lakh crore, while revenue from imported goods was higher 13.56 per cent to Rs 46,919 crore. Total refunds during March rose 41 per cent to Rs 19,615 crore. After adjusting refunds, net GST revenue stood at over Rs 1.76 lakh crore in March 2025, a 7.3 per cent growth over the year-ago period.       - Business Standard 02 th March, 2025
Post a Comment
Read more