Indian Tax Solution

No higher service tax on air tickets booked before April 1: CBEC
NEW DELHI: The Revenue Department has said air travellers who had purchased their tickets before April 1, 2012 will not have to pay the higher service tax.

"It has been brought to the attention of the Board (CBEC) that some airlines are collecting differential service tax on tickets issued before 1st April 2012 for journey after 1st April 2012, causing inconvenience to passengers," the Central Board of Customs and Excise (CBEC) said.

The rate of service tax was 10 per cent till March 31, 2012 but it has been increased to 12 per cent from April 1, 2012.

The Board has asked airlines companies to deposit the differential service tax collected by them on tickets issued before April 1, for journey after that date, in a central government account.

"...to the extent airlines have already collected extra amount as service tax and do not refund the same to the customers, such amount will be required to be paid to the credit of the Central Government," it added.

While the service tax has been increased to 12 per cent from April 1 in the Union Budget, the levy will be imposed on only 40 per cent the ticket value.

Besides, the service tax calculation on air travel has been changed from specific amount to a fixed percentage of the ticket value.

Referring to the Point of Taxation Rules 2011, CBEC said that in case of airline industry, the ticket so issued in any form is recognised as an invoice.

Source: http://economictimes.indiatimes.com

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