QUESTION
A's client is a Tour & travel
agency. He take vehicles buses from other operators. He does not own any vehicles. He book railway, Bus, Air Tickets for
his clients (corporates, pvt ltd, individual &
walk in) How should he charge GST ?? and at what rate? Is he eligible for ITC?
He book Vehicles & buses for his
clients (corporates, pvt ltd, individual & walk in). He get the vehicles & buses from tour travel agents and supply to others. How
should he charge GST and to whom should he charge under forward charge and whom
to charge under RCM.
Fixed departure date Tours package designed by him with a common date he gather
clients who are ready to join his group tours and pay the charges as decided by
him. How does he bill them and he in
accordance book hotels and travel food local sightseeing charges how does he
charge GST. Whether he is eligible for ITC from hotels & other services hired.
Tailor made tours: He design tour
local/international as per requirements of clients (corporates,pvt
ltd, individual & walk in). He book tickets Air/Bus/Railway. He book hotel stay food local sight seeing, local transfer vehicle other sports
or adventure tours how does he charge GST and how to claim credit of ITC if it is
available?
Also provide the HSN code & tax
rates for the above services.
ANSWER
Facts of the case: Client is engaged in the business of tour and travels. He books air/bus/railway tickets. To check the applicability of GST on this business model.
Law Applicable:
1. Rule 33 of CGST Rules dictate that
"Notwithstanding anything contained in the provisions of this Chapter, the
expenditure or costs incurred by a supplier as a pure agent of the recipient of
supply shall be excluded from the value of supply"
2. Entry number 23 of
notification 11/2017 (Rate) is laid as under
Notification No. 11/2017-Central Tax (Rate)
| 23. Heading 9985 (Support services) | ||
|
(i) Supply of tour
operators services. |
2.5 |
1. Provided that credit
of input tax charged on goods and services used in supplying the service
12[other than the input tax 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. |
Interpretation: The business and taxability model of tour and travel agent can fall under the following three alternatives as illustrated below
Illustration 1:
Tickets worth Rs 10,000 is booked and the agent charges 500 as his service fees.
Under Rule 33, the value of 10,000 will be excluded from the value of supply and
tax will be levied on 500 @ 18% under the HSN 9985.
ITC can be claimed to the extend input/input services/capital goods are used in
rendering the service of Rs. 500.
Illustration 2:
Tickets worth Rs 10,000 is booked and the agent charges 500 as his service fees.
Invoice is raised under the HSN 9985 at the amount of Rs 10,500 taxable at the
rate 5% with the restriction on caliming of ITC.
Illustration 3:
Tickets worth Rs 10,000 is booked and the agent charges 500 as his service fees.
Option under notification 11/2017 is not opted by claiming the ITC. Now tax rate
will be 18% on the amount of 10,500 under the HSN 9985.
Switching between the above three alternatives is possible transaction wise. Meaning thereby that, it is possible for an agent to choose any of the above 3 taxability structure whichever benefits him the most considering each transaction separately.
Conclusion : Taxability can be decided transaction wise whichever is most beneficial to the client. (Reply dt. 25/11/2021)