Are you charging 0.9% & 1.8% on Air Ticket as GST ?

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Are you charging 0.9% & 1.8% on Air Ticket as GST ?

If you are a Air Ticket Booking Agent and charging 0.9% above Domestic Ticket & 1.8% above on International Ticket as GST. Then its a BIG MISTAKE you are doing. You are not suppose to charge any tax on the ticket amount as airlines have already charged 5% & 12% GST on the Basic + YQ of Economy and Business Class respectively.

For clarification Please read the following points and try to understand the Taxes.
  1. First of all please accept that from 01 July 2017, Any Commission received by a travel agent from airlines or any supplier is burdened by 18% Tax. So for Every 100 rupee received you are bound to pay Rs.15.25/- (18% included Rs.100) as GST as Indirect tax and TDS deduction Direct Tax is as it is @ 5%.
  2. Who is issuing and billing a Flight Ticket. Its Agent or Airlines?
  3. Please don't make a mistake in understanding that a agent is booking the ticket?
  4. Airlines ticket is issued by the Respective Airlines only and is billed to the respective customers only.
  5. Since the ticket is issued by the airlines and airlines charges the GST on their fare and bills the ticket to the customer directly then why a agent is charging the GST over the ticket amount.
  6. No double Taxation is allowed under GST?
  7. A Agent receives a Commission on behalf of processing the ticket for the airlines.
  8. With GST law GST is to be paid from the commission earned and it is the agent who have to bear that Tax Burden not the burden of agent tax has to be passed to the customer.
  9. Some people are still thinking in the old pattern which was available when Service Tax was enforced.  
  10. Please note in Service Tax a special case and law was there under which at Tax of .75% in case of Domestic tickets and 1.5% in case of International Ticket was mentioned when Service Tax was 15%.
  11. But in GST till today their is no such liberty is given for Travel agents (Air Ticket Agent)
  12. Please keep it in mind Tax % under GST Law is as : 0%, 3% (Gold ornament Business only Special rate), 5%, 12%, 18%, 28%.
  13. No where its mentioned 0.90% or 1.8% as GST, under GST Law. IF ANY ONE HAVE SEEN IT PLEASE LET ALL KNOW THE SECTION OR SCHEDULE OF GST LAW WHERE IT IS MENTIONED. You can send the link or write in the reply option at the bottom of this post.

In a Very Simple words, 

  1. A passenger Purchases a Ticket to avail a Air Journey from one destination to another. Service is provided by the Airlines and Service is consumed by the Passenger. There for airlines charges the GST of 5% in case of Economy class and 12% in case of Business Class on their Basic + YQ. This amount is included in the total cost of Ticket. So they don't have to pay any more tax other than mentioned in the total fare of ticket.Here ITC can be claimed by the passenger if the journey is for official / Business purpose.
  2. Air Ticket Agent receives a Commission for processing the ticket issuance process between the airlines and customer. Commission earned is of that particular Agent / Agency. Which is no way connected to the passenger. So the GST of 18% from the earned commission is to be paid by the agency and not by the customer. SO CHARGING 0.9% & 1.8% IS TOTALLY WRONG. There will be no ITC on the 18% Tax paid on the commission earned
  3. If you are charging any additional service charge or mark-up then that particular amount have to shown separately in you Tax Bill and that will attract 18% of Tax which you can collect from customer and will have to be deposited. Here 100% ITC is allowed if the passenger is travelling for official / Business purpose. 

Post a Comment

16 Comments

  1. Dear Sir,
    At the time of booking of ticket two services are involved. One transport of passenger by air service , which is being provided by the airlines and on which GST @ 5% on economy class and @ 12% on other than economy class is being charged by the airlines on customer.
    And second , the air travel agent service by the ATA against which he gets the commission both from the Airlines and from the customer. The agent has the option to pay GST @ 18% on such commission or @ 0.9% or 1.8% of base fare as GST on agency service.
    If option one is availed ATA will collect GST on commission @ 18% both from airlines and customer. If option 2 (base fare model) is opted then GST @ 0.9% or 1.8% will be collected either from airlines or customer.

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  2. In Option 2, the calculation is 18% of 5% of basic fare (as per valuation rules) i believe. This seems logical because the valuable rules clearly states that the value of supply shall be taken as 5% of basic fare.

    ReplyDelete
    Replies
    1. Sir, 5% is GST not your Commission. so please read the above article once again. And more over read this article 1st http://www.24x7network.in/2017/07/should-travel-agent-charge-cgst-sgst.html

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    2. Exactly ...that's y the final rate is coming to 0.9%, i.e. 5% of 18% in case of domestic flight and 1.8%, i.e. 10% of 18% in case of international filght.

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  3. Exactly ...that's y the final rate is coming to 0.9%, i.e. 5% of 18% in case of domestic flight and 1.8%, i.e. 10% of 18% in case of international filght.

    ReplyDelete
    Replies
    1. More over as per your understanding 0.9% or what so ever. But 18% of you commission is to be paid by you. from your pocket as GST.
      COMMISSION EARNED IS OF AGENT NOT OF CUSTOMER. SO TAX WILL BE PAID BY THE AGENT NOT BY THE CUSTOMER

      MORE OVER TALK TO GST REGISTERED PRACTITIONER. AND DON'T CONFINED YOURSELF TO ONE OPINION.

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    2. Dear Sir,
      I agree that commission earned if of Agent, but being an Indirect tax it will always be collected by the consumer. Going by your logic, even GST on ticket fare should not paid by the consumer since its the income of the airlines so they should bear it from their own pocket.
      Indirect tax structure doesn't function in this manner.

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    3. Dear Sir,

      For ATA activity 2 models play.

      1 Airlines who issues the ticket and charges GST of 5% or 12% for the amount charged for the particular service. For example Rs.1000 as Basic + Fuel Charges and GST Tax Rs.50 @ 5%.

      More over Rs.1000/- is not the complete income of airlines. They have other operational cost also.

      2. Does a Travel Agent provide any service in operation of flight. Hope no.

      But a agent gets a commission for processing / referring a customer for a Particular airlines and acts as a Pure Agent.

      And as a GST Law Pure agent have to Pay 18% of their earning. Hope it is very clear

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    4. But what about mark-up/booking fee etc collected from customer by the agent? In that amount also the agent has to pay GST which will be collected from the customer. Hope its clear.

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    5. Dear sir,

      Service charge / Mark-up are addition services that a agent charges. And over the amount He have to collect the GST tax of 18%.

      Note : The service charge have to be shown separately and Tax over the service charge.

      Please read the link below , and if liked please advice

      http://www.24x7network.in/2017/07/gst-air-travel-agent-mark-up-service.html

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    6. Dear Sir,
      In my first post, I had mentioned the same. So there is no difference of opinion in that. The summary is:-
      On Airlines Ticket Charge...GST will be charged by the Airlines and on Agents commission GST will be charged and collected by the agent by using any of the two options discussed above.

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    7. Dear Sir,

      Gone through your 1st post, But An agent can't charge 0.9% & 1.8% as GST over the ticket.

      This is the mistake the agent is Doing.

      People are treating it as service tax rule 6.

      Hope Service tax is no more.

      If say for Example one charges 0.9% on tax under which SAC code will he pay.????

      Delete
  4. Sir, the Agent is receiving Commission from Airlines i.e. they are providing service to the Airline and hence they shall charge GST to the Airlines and Airlines shall in turn MAY be eligible for Input else it will be an expense to them they can not deduct GST from Commission unless it is defined that Commission payable is Including Taxes...

    ReplyDelete
    Replies
    1. Most of the airlines before GST also they use to pay after deducting Service tax + TDS. So With GST enforce the same they should follow. Once the same thing they will follow then only agent will get the exact commission agreed between Airlines and Agency.

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  5. What is the taxable sale for an air travel agent

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  6. https://iato.in/uploads/circulars/GST_Circular_from_IATO.pdf

    This is the circular regarding GST on air travel .

    ReplyDelete