The Central Government vide Notification No. 04/2017 has amended the Rate of Abatement under Service Tax on TOUR OPERATORS w.e.f. 22-01-2017 with details as below:-
(1) Any booking solely for the purpose of accommodation by a tour operator has been removed from the category of Tour Operator which was previously taxed after 90% abatement – It is suggested that in such cases a tour operator should charge his commission separately from the customer and Service Tax to be charged only on the Commission earned by the tour operator and Service Tax at the Full Rate of 15%.
(2) A tour, other than 1 above : Rate of Service Tax changed to 9% [NEW RATE] from earlier 4.5% [OLD RATE] (Abatement reduced from 70% to 40%).
However, in order to facilitate the the Tour Operators, the Government has permitted the CENVAT Credit on Input Services used for providing the Taxable Services.
Further, it is prescribed that “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“.