QUESTION
XYZ Pvt. Ltd. is engaged in Tour operator services. Sometimes it books only hotels on the behalf of his customers. Hotels issued invoices in the name of XYZ Pvt. Ltd (customer name mentioned on invoice). Further, XYZ Pvt. Ltd. issues invoices to his customers for hotel charges along with its services charges. Can XYZ Pvt. Ltd. charge GST @18% on service charges only, considering itself as Pure agent for his customers? or he has to charge GST @18% on the total value i.e. hotel charges plus service charges?
ANSWER
FACTS OF THE CASE:
XYZ Pvt. Ltd. is engaged in Tour operator services. Sometimes it books only
hotels on the behalf of his customers. Hotels issued invoices in the name of XYZ
Pvt. Ltd (customer name mentioned on invoice). Further, XYZ Pvt. Ltd. issues
invoices to his customers for hotel charges along with its services charges. Can
XYZ Pvt. Ltd. charge GST @18% on service charges only, considering itself as
Pure agent for his customers? or he has to charge GST @18% on the total value
i.e. hotel charges plus service charges?
LAW APPLICABLE:
Notification No. 11/2017 Central Tax (Rate)
| 23. Heading 9985 (Support services) | ||
| (i) Supply of tour
operators services. Explanation.- "tour operator" means any person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours. |
2.5 | 1. Provided that credit
of input tax charged on goods and services used in supplying the service
other than the input tax credit of input service in the same line of business (i.e. tour operator service procured from another tour operator) has not been taken [Please refer to Explanation no. (iv)] 2. The bill issued for supply of this service indicates that it is inclusive of charges of accommodation and transportation required for such a tour and the amount charged in the bill is the gross amount charged for such a tour including the charges of accommodation and transportation required for such a tour. |
REPLY:
In this transaction, there may be two scenarios:
1. If Hotel issues invoice to XYZ mentioning on account of Customer, then it
will be considered as Pure Agent services and XYZ will charge 18% GST on other
services.Travel agent should clearly mention on invoice
Reimbursement of amount paid to ------- Hotel against bill no ---- dt -------
2. Otherwise services provided by XYZ will get covered under Supply of Tour
Operator services and GST @ 5% will be charged on total value of invoice (Hotel
charges plus other service charges) subject to condition that credit of input
tax charged on goods and services used in supplying the service has not been
taken. (Reply dt. 07/09/2021)