Service Tax on package tour slashed by 15 per cent

New Delhi, Aug 23 (UNI) A tour operator will now be required to pay service tax only on 25 per cent of the gross amount charged on the tour package.

This is the result of the Government increasing the rate of abatement to 75 per cent for the purpose of levy of service tax on taxable services provided by tour operators in relation to package tours, the Tourism Ministry said here today.

The Finance Ministry has issued a notification to this effect today.

At present, tour operators, providing package tour which includes transportation, accommodation for stay, is liable to pay service tax on 40 per cent of the gross amount charged for such tour.

Services provided by tour operators, in relation to a tour, are leviable to service tax under Tour Operators Service.

In other words, 60 per cent of the gross amount charged is provided as abatement for the purpose of levy of service tax.

The Tourism and Culture Minister Ambika Soni had taken up this matter with Finance Minister P Chidambaram in a letter dated August, 30 last year and followed it up with a series of meetings at the official level between the two ministries.

A presentation in this regard was made by the Tourism Ministry representatives to the Advisory Committee on service tax abatement in mid July.

The request of the Ministry of Tourism was examined by the Advisory Committee on Service Tax Abatement and the Committee has recommended to prescribe the rate of abatement of 75 per cent on package tours where the gross amount charged includes cost of accommodation, food, transport arrangement, tourist guide, entry to monuments and other similar categories of expenditure.

The recommendation of the Committee was accepted by the Government and a notification was issued.

UNI