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IATO raises voice against double taxation, discrimination
Sanjeev Bhar - New Delhi
 The
Indian Association of Tour Operators (IATO) has expressed serious concerns over
the service tax to be incurred by tour operators with respect to foreign tour
operators and travel agents. Subhash Goyal, president of IATO said, "We
have drawn the attention of the finance ministry towards the service tax regime
and how it is hurting us. The dual taxation is of grave concern for domestic
tour operators and we have urged the ministry to have a look into the matter."
Major Murli Dhar, senior vice president, IATO, informs, "The recent problem
that has come to our notice is, when our counterparts abroad book hotel rooms
directly, they are not charged any service tax at all." He continued, "If
a tour operator sells hotel rooms only, which constitutes 60 to 70 per cent
of the total package cost, he incurs service tax at 1.224 per cent. Secondly,
if tour operators combine the hotel room even with one of additional services
like lunch or dinner, or airport transfer, he has to pay service tax at 4.896
per cent on the total package cost, which makes the package cost prohibitive
and uncompetitive. Whereas, if rooms are booked by foreign tour operators, tourists/clients
with the hotel directly, no service tax is levied on them."
Reiterating the same, Gour Kanjilal, executive director of IATO, explained,
"The government policy needs to be rational, otherwise the survival of
domestic tour operators is in jeopardy. The finance ministry should understand
that due to its irrational service tax structure for domestic tour operators,
hotels have now started dealing directly with foreign tour operators."
Rajesh Mudgill, managing director of Planet India Travels said, "Government
should take a note of the fact that if a tour operator hires a coach from a
transporter, he pays rent for the coach plus service tax of 12 per cent. But
on charging the same to foreign agents we have to further add service charge
of 4.89 per cent, which means levying double tax."
| Tour package |
4.896 per cent |
| Air tickets (domestic) |
0.612 per cent of basic fare |
| Air tickets (international) |
1.224 per cent of basic fare |
| Hotel accommodation (room only basis)
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1.224 per cent of total bill |
| Hotel accommodation with meals |
4.896 per cent of the total bill |
| Transport services |
4.896 per cent of total bill |
| Railway tickets |
12.24 per cent of the service charges
on the bill |
| (Source: IATO) |
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