SERVICE TAX ON TOUR OPERATOR SERVICE (BOOKING OF HOTELS)

Regarding Service Tax on Hotel Booking, let me explain you as below :-

1.     There is always a wrong concept over Service Tax on Hotels by maximum of the taxpayers. As ST liability by a Hotel Owner is different from ST liability by a Tour Operator.

2.     Tour Operator Service : - M/s. XYZ Travels is classifiable as Tour Operator but not as a Hotel Owner if you are booking hotels for customers, Hence, let's discuss about Tour Operator and liabilities in detail example.

Department's ST Notification No. 26/2016 where abatement rates are given to Tour Operator Service Provider in SL. No. 11.

Tour Operator Service :- 

This is as per 26/2012 Notification

Class	Abatement	Taxable
a. Services by a Tour Operator  in relation to a package tour	75%	25%
b. Services by a Tour Operator in relation to a tour if the tour operator is providing services soley of arranging or booking accommodation for any person.	90%	10%
c. Services provided by a tour operator other than the above 2 types of Services specified class	60%	40%

The above has been amended vide Notification No. 04/2017 with effect from 22.01.2017 with 60% abatement has been reduced to 40% abatement.

Class	Abatement	Taxable	Service Tax	SBCess	KKCess	Total
a. Services by a Tour Operator  in relation to a package tour	40%	60%	8.4%	0.3%	0.3%	9%
b. Services by a Tour Operator in relation to a tour if the tour operator is providing services soley of arranging or booking accommodation for any person.	90%	10%	1.40%	0.05%	0.05%	1.5%
c. Services provided by a tour operator other than the above 2 types of Services specified class	60%	40%	5.6%	0.2%	0.2%	6%

  

So, exclusively Hotel Booking by Tour Operator falls under 2^nd Category in the above table and calculation will be as follows :-

So, M/s. XYZ Hotels, Mumbai issues a bill in this way

Hotels Bill per day                            1 day                  Rs. 3000/-

ST Taxable value                                                        Rs. 1800/-(60% of 3000/-)

ST@14%                                                                   Rs. 252/-

SBCess @0.5%                                                          Rs.9/-

KKCess@0.5%                                                           Rs. 9/-

Total                                                Rs.3270/- (Rs. 3000+Rs.252+Rs.9+Rs.9)

And M/s. XYZ Travels issues a Bill in this way

To  Shri. Alok Kumar for Hotel Booking

Hotel Bill for 1 day                                                       Rs. 3270/-

Processing Charge                                                      Rs. 500/- (if it is charged)

ST Taxable Value                                                        Rs. 377/- (10% of Rs. 3770 )

ST @14%                                                                   Rs.53/-

SBCess@0.5%                                                           Rs. 2/-

KKCess@0.5%                                                            Rs. 2/-

Total Bill Value                                                             Rs. 3827/-