Value of Services by Air travel Agent under GST Valuation Rules – Makemytrip, PayTM
by Paras Mehra 16.3K
Introduction
Valuation for air travel agents is done with GST valuation rules and not on the basis of transaction value. Air Travel agents are the mediator between the ultimate customer and the airlines e.g. Makemytrip.com, PayTM are all examples of Air travel agents because they acts as a mediator between the customer and the airline companies like Air India etc.
How Valuation works for Air Travel Agents
The value of supply of services in relation to booking of tickets for travel by air provided by an air travel agent shall be deemed to be an amount calculated at the rate of five percent of the basic fare in the case of domestic bookings, and at the rate of ten per cent of the basic fare in the case of international bookings of passage for travel by air.
In other words, the valuation of services provided by Air Travel Agents can be categorized into two parts:
- For Domestic Booking – 5% of the basic fare
- For International Booking – 10% of the basic fare
“Basic fare” means that part of the air fare on which commission is normally paid to the air travel agent by the airline.
GST Tax rate on Air Travel Agents
As per the new GST tax rate, the GST tax rate shall be 18% with full ITC on air travel agents. Hence, the Makemytrip or PayTM working as a air travel agents shall be liable to pay 18% on their value.
Whether Input Tax Credit is available to Air travel Agents
Yes, full ITC is available to the air travel agents
Place of Supply in case of Air Travel Agents
The place of supply (if made to registered person) shall be the location of such person. This is because air travel agent gives service to the airlines and not to the general public. Further, if they charge anything from the general public (unregistered person) in the name of commission then the place of supply shall be:
- The location of recipient where address on record exists; and
- The location of the supplier of services in other cases.
What to charge IGST or CGST/SGST in case of Air travel agents
If the place of supply is outside the state, then IGST shall be charged and where place of supply is within state, then CGST/SGST shall be charged
Conclusion
In case of any doubt, you may email us at info@hubco.in.
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