Government notifies limited exemption on service tax for tour operators

Central Government issued Notification No.15/2007-Service Tax dated 04.04.07 under section 11C of the Central Excise Act, 1944, exempting levy of service tax, for the period from 01.04.2000 to 04.02.04, on 60% of the gross amount charged for taxable services provided by tour operators, operating under a contract carriage permit issued by the appropriate transport authority, for transport of passengers from one place to another (other than services provided in relation to package tours).

Representations were received from transport operators / bus owners operating regular point to point transport of passengers between different cities or towns under contract carriage permit issued by the appropriate transport authority that they had been asked to pay service tax on 100% of the gross amount charged by them with effect from 01.04.2000, whereas service tax should be charged only on the commission earned. Notification No.2/2004- ST dated 05.02.04 was issued prescribing abatement of 90% from gross value in respect of taxable service other than packaged tours. Abatement of 60% from gross value has been available since 09.07.04 vide notification No.8/2004-Service Tax dated 09.07.04 and not prior to that date.

The Central Government has decided to extend the benefit of abatement of 60% from gross value in respect of the above mentioned taxable services to the past period also i.e. from 01.04.2000 to 04.02.04.

Source : Press Information Bureau

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