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TAAI moves aggressively to address service tax issue

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Rituparna ChatterjeeMumbai

Harmandeep Singh Anand

Travel Agents Association of India (TAAI) is aggressively undertaking a series of initiatives to create awareness and resolve issues related to service tax that has been plaguing the travel industry in India for years. To create awareness on service tax regulations, the association recently conducted a series of presentations on the same across 19 chapters for its members. “Presently, the Indian travel agents are paying a service tax of 12.36 per cent from their commission to the central excise department. Currently, travel agents are unable to recover the service tax amount from the airlines. We should come to a consensus that this is an industry procedure which has to be followed and accordingly recover the service tax from the airlines by raising an invoice and subsequently pay the amount to the central excise department,” stated Harmandeep Singh Anand, honorary secretary general, TAAI and managing director Jagsons Travels adding that these presentations have helped educate the consolidators and travel agents. “We are sending representations to our members and are telling them to put it on their letter head and send it to the airlines to recover the amount,” opined Anand.

Moreover, to provide an alternate solution to the service tax issue, a meeting was recently organised by FAITH, wherein the association made a proposal to Vinod Kumar, joint secretary TRU (II), Central Board of Excise and Customs, Government of India to implement reverse charge mechanism (RCM) in service tax for the travel industry so that airlines can pay the service tax directly to the government. “There are around 100 airlines in India and we have around 3500 IATA agents and a million non-IATA agents. Instead of recovering the tax from these many agents, it is sound enough to collect it from the airlines directly, so that the travel agents are not required to pay the service tax from their profits,” stated Anand. Speaking on the same, Manish Gadia, partner, GMJ & Co Chartered Accountants stated, “We definitely support RCM since it will be beneficial to all the stakeholders – airlines, government, travel agents and travellers. If RCM comes into effect then there won’t be any extra hassle for the travel agents. Furthermore, the ticket cost will also lower, thereby proving beneficial to the travellers.” “We haven’t taken any decision since we are presently in talks with various heads on the RCM matter,” stated a spokesperson from Emirates. Indigo was also contacted but they declined to comment on this issue.

In addition, the association has also proposed the exemption of religious tours and outbound tourism from service tax. Moreover, the next initiative of TAAI is to educate and equip its members on new distribution channels. The initiative organised in association with InterGlobe will be held across all its chapters. The association also has plans to form a new chapter in Lucknow in the near future. Speaking about its proposed convention, Anand said, “We may consider having two conventions, one in India and the other abroad.” There are talks to host its convention anytime from September to December this year. TAAI is also exploring the opportunity of hosting their annual convention in 2015 in Edinburgh, Scotland. “We also want to get a CEO into TAAI and we would want to have one domestic convention and one destination learning experience every year,” he mentioned.

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