Service Tax - Foreign air travel – even return journey is taxable
Service tax is leviable with effect from 1st May, 2006 on services provided by an aircraft operator to passengers embarking in India for international journey by any class, other than economy class, under section 65(105)(zzzo) read with section 66 of the Finance Act 1994. Board of Airline Representatives in India (BAR) have sought clarifications on the levy of service tax and the good Board clarifies.
1. Issue: Stopover – tax till end: For a journey starting from India with stopover at intermediate airports- Mumbai-Dubai-London-New York. Is the tax for the ticket from Mumbai to Dubai or from Mumbai to New York?
Board Clarification: Stopover is irrelevant – pay tax for the whole journey.
What if a separate ticket is bought for journey from Dubai to New York? Still taxable?
2. Issue: If international journey involves domestic travel too - Delhi-Mumbai-London, is the domestic sector taxable?
Board Clarification: Pay tax on the whole value!
Again what happens if a separate ticket is bought for Delhi – Mumbai?
3. Issue: In the case of round trip/return ticket, whether service tax is leviable on the total value of the ticket or only half the value of the ticket?
Board Clarification: Pay tax onthe whole value.
Does it mean that a ticket from Dubai to Mumbai is also taxable?
4. Issue: Whether ticket issued outside India for an international journey commencing from India (say Delhi–London) is leviable to service tax?
Service tax is payable by the service provider for the taxable service provided. Place of purchase/ issue of ticket is of no relevance or consequence to determine the levy of service tax.
In this case who will pay the tax? Suppose my friend buys a ticket for me in New York for a journey from Mumbai to London. Am I liable to pay the tax and should I get registered before I board the aircraft?
CIRCULAR NO. , Dated: October 17, 2006