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Revised service tax: Passengers told to pay during check-in
April, 06th 2012

International travellers have been forced to shell out additional money as service tax before check-in at the Chennai airport during the last few days.

The government hiked service tax on tickets with effect from April 1, but foreign airlines and passengers are in a fix as there is no clarity on whether the tax should be collected on tickets issued in March for travel in April or for tickets sold from April 1. Emirates airlines and Oman Air started collecting the difference in service tax on tickets sold in March through travel agents for travel in April. Gulf Air also collected the difference in tax but stopped it on Thursday. Singapore Airlines, Lufthansa and others have decided to wait for a few more days.

An Oman Air circular informed airport managers that service tax at 4.944% would be levied on base fare and the difference in tax from the previous rate should be collected from passengers at check-in for tickets booked on or after March 16.

An official spokesperson of emirates said that the tax was collected as per an instruction from the government order and the airline fully abided by the rules and regulations of the markets in which it operated. Many passengers are surprised. "Passengers may not carry much cash at check-in. Some convert Indian currency into the currency of the country of their destination before check-in. Many passengers are forced to run around to get cash to pay the service tax before boarding. Passengers are forced to pay 250-500 per ticket depending on the value of base fare," said a a passenger.

Air Passenger Association of India president D Sudhakara Reddy said they had been getting calls from passengers about tax being collected at check-in. "Service tax should be levied only on a service sold. It is not clear if airlines have been told to collect tax with retrospective effect," he added. The Travel Agents Federation of India (TAFI) has informed all agents that Air India has been advised to collect increased service tax on all tickets issued by agents on or after March 1 for travel on or after April 1. As agents have already sold the tickets and cannot recover the money, TAFI intimated airlines to collect the difference from passengers directly. An AI spokesperson said, "We will be collecting the revised service tax on tickets booked from April 1."

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