Should A Travel Agent Charge CGST, SGST, IGST on Air Ticket ?

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Should A Travel Agent Charge CGST, SGST, IGST on Air Ticket ?


Air Travel Agency / Agent is one who provides the ticket to a passenger through airlines or consolidator and earns commission on either from airlines or consolidator and second way of earing is through markup or service charge.

 A Travel Agent who have booked a Air Ticket for a customer they should not charge any taxes over the actual price of the ticket, because ticket is booked by you for the customer on the behalf of Airlines already includes CGST + SGST or IGST over the basic fare. See the 2 ticket fare details

Example 1 : CGST & SGST have been Charged by the airlines

Example 2 : IGST have been charged by the airlines

Lets find some cases which is associated with this ticket.

  1. If you provide the Ticket to your Customer @ Rs. 8392/- (Ticket of Example 1) + Rs.5075/- (Ticket of Example 2)  = Rs. 13467/- You should not charge any type of Tax like CGST,SGST or IGST.
  2. If You have earned a commission of say Rs.150 + Rs. 100/- = Rs. 250/- for Booking this ticket. Agency will have to pay 18% Tax on the commission earned. i.e. 9% CGST + 9% SGST. In this case Tax amount will be Rs.22.5 as CGST & Rs.22.5 as SGST. Total Rs. 45/-
  3. The amount of Rs.45/- can't be charged on Rs.13467/- as stated in the point 1. If you do this will be case of Double Taxation which is not allowed under GST Bill. As the customer will avail the services of airlines and the airlines have already charged the Tax @ 5% on basic fare there should not be any extra tax burden for 1 service.
  4. Some Agency is charging 0.9% Extra as tax under GST on the ticket amount. Please don't do as there is no Tax slab of 0.9% in GST Bill. Don't miss match with service tax rule. Since 01/07/2017 Service Tax doesn't exist in India. And GST is different than Service tax.
  5. GST bill have clearly stated that any type of Commission like PLB, Deposit Incentive, Transition fee received from airlines is a part of Commission. And 18% Tax is applicable on Commission received.
  6. Mark-up and service charges collected over the ticket cost is Taxable by 18%. May be a case of 9%CGST + 9% SGST or 18% IGST. Taking the example from point 1 as stated above. You charge a service charge / fee of Rs. 1000/- for booking the 2 tickets value Rs.13467/- Your bill of supply should indicate the following things Cost of Ticket Rs. 13467/- Service charge Rs. 1000/- and CGST Rs. 90/- + SGST Rs. 90/- OR Rs.180/- as IGST depending upon the case of supply. So in this case total amount to be collected from Customer will be (Rs. 13467 + 1000 + 180) = Rs. 14647/- Inclusive of Tax. 
If you have any question related to this topic feel free to ask through reply button below this article. We will be happy to answer your question or to write the post based on your case.
KEEP READING WILL COME WITH DIFFERENT EXAMPLES RELATED TO TRAVEL AGENCY. ONE BY ONE. 

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13 Comments

  1. any example how to handle markup

    ReplyDelete
    Replies
    1. please give with the example of CGST,SGST & IGST

      Delete
  2. If we do not charge any service charge to client and sell the ticket at the same cost as Rs. 13467 to customer then our invoice will not show any GST value.
    Is this fine to sell the tickets to clients without collecting any GST as the airline has already collected the same and we update the GST number of the client on Airline System.
    Ad when airline is paying us the Commission they are deducting 18% on the commission payable to us and paying to the Government which is credited to our GST no.

    ReplyDelete
    Replies
    1. Hi!

      If the 18% of your commission amount is deducted by airlines then they will deposit the same in government account and will put your GST No. where you have to take the input. If they don't do so then it will be your liability to pay the tax.

      Delete
  3. If the 18% of your commission amount is deducted by airlines then they will deposit the same in government account and will put your GST No. where you have to take the input. If they don't do so then it will be your liability to pay the tax.

    ReplyDelete
  4. Now as stated , that the travel agent should charge 18% on commission earned or service charge , but if the whole years total commission and service charged earned is below 20 Lakhs , should we still collect the 18% GST or is it ok if we dont charge anything ? please clarify

    ReplyDelete
    Replies
    1. GST is not over your earning its on your turnover. Say you earn Rs.100/- on sell of a Ticket value Rs. 10000/- Your turnover will be Rs.10000/-. More over due to Section 9 (4), if you have to issue a bill then GST is mandatory. So Please note in service sector you need to have a GST registration. Soon we will come on section 9 (4) of GST. Most dangerous law under GST.

      Delete
  5. Kindly clarify on the below example as under:-

    We buy ticket of Rs. 10,000/- from the consolidator who is purchasing the flight tickets from airlines and consolidator provides us the commission of Rs. 200/- and we arre paying amount of Rs. 9800/- to our consolidator (after deducting commission).
    Also we are charging service fee of Rs. 300/- on issuing the flight tickets so kindly advice what amount of GST will be charged from our customer?


    ReplyDelete
    Replies
    1. Dear Anisha,

      In this case also you are selling the ticket value Rs.10,000/- issued by airline. Note you consolidator is not issuing the ticket. Airlines have charged the GST on Basic + YQ. For details read the link http://www.24x7network.in/2017/07/are-you-charging-09-18-on-air-ticket-as.html .

      Here on your earning of Rs. 200/- you have to pay the tax @ 18%. So the amount of Rs. 30.51 as GST have to be paid to government account. This amount can't be collected from the customer.

      secondly on the service charge of Rs. 300/- you will collect Rs. 54/- from the customer. so in this case amount collected from the customer will be Rs.10,000 + Rs. 300 + Rs. 54/- as GST = Rs.10354/- Inclusive of GST

      But Total GST Payable by You will be Rs.84.51/- to the government. Rs. 30.51 of Commission and Rs.54/- for GST collected on service charge.

      Delete
  6. Sir i a air travel agent n buy tickets from a broker on commission basis and i also charge some extra amount on my bill so on what amt i can pay gst can u tell me with example

    ReplyDelete
  7. Sir i a air travel agent n buy tickets from a broker on commission basis and i also charge some extra amount on my bill so on what amt i can pay gst can u tell me with example

    ReplyDelete
  8. Thanks for sharing this valuable information I previously booked flight tickets on goibibo flights with the help of goibibo coupon on shopozo.

    ReplyDelete
  9. Sir,
    as a air travel agent i am charged 18% gst on mark up and shown k3 tax in our bill. wise a versa i have provided my gst number at the time of ticket booking though should i eligible to take ITC of airline and passone k3 tax credit to client

    ReplyDelete