Service tax applicability to propreitorship travel agencies

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  1. Pavithra Pillai

    Pavithra Pillai New Member

    Dear Sir,
    My friend is starting a travel agency in his mother name, he is going to enter into a contract with a Bangalore based construction company. I am having doubt in applicability of service tax for these kind of contract based work. As they have clearly told that only TDS of 2% is applicable, I am having confusion weather service tax is applicable. If it applies how much rate of Tax should be paid, is there any abatement for these kind of agencies? Please help and clarify sir.
     
  2. Shivangi Garg

    Shivangi Garg Member

    Sir
    by travel agency you mean tour operator or travel agent who books tickets?
    and how is this construction company related?
    Plz elaborate
    Thanks
     
  3. Pavithra Pillai

    Pavithra Pillai New Member

    He is going to own about 10-12 nos of cars (Mahindra Xylo) which will pick up the engineers, supervisors and other personalities from the head office to drop them at different places of construction sights in and around Bangalore and it is a contract for 3years.
     
  4. Shivangi Garg

    Shivangi Garg Member

    Sir,

    In case your friend's travel agency complies the below mentioned definition of contract carriage then its exempted from service tax.

    “Contract carriage means a motor vehicle which carries a passenger or passengers for hire or reward and is engaged under a contract, whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorized by him in this behalf on a fixed or an agreed rate or sum —

    (a) on a time basis, whether or not with reference to any route or distance; or

    (b) from one point to another, and in either case, without stopping to pick up or set down passengers not included in the contract anywhere during the journey, and includes —

    (i) a maxicab; and

    (ii) a motor cab notwithstanding that separate fares are charged for its passengers”.

    The ingredients of a contract carriage are as follows :—

    • It carries passengers for hire or reward;
    • It is engaged in contract whether expressed or implied for use of such vehicle as a whole;
    • The contract must be entered into by the person with the holder of permit in relation to such vehicle or with any person authorized by him;
    • The agreed consideration can either by on time basis or one point to another;
    • The vehicle should not stop to pick up or set down passengers not included in the contract anywhere during the journey;
    • It includes maxi-cab or motor-cab.

    Thanks
     
    Pavithra Pillai likes this.
  5. Pavithra Pillai

    Pavithra Pillai New Member

    Dear Madam,

    Thank you so much for clarifying me.
     
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