Your vacation may now cost more with the government deciding to enforce collection of service tax from all tour operators on foreign trips. The additional levy on outbound tours would include the education cess and higher and secondary education cess besides the service tax.
Recently, the Commissionerate of Service Tax in Delhi had called a meeting of all major tour operators where the travel and tourism companies were apprised about their service tax liability. When this did not have the desired effect, the Delhi commissionerate booked three big players in the outbound tour segment for more than Rs 23 crore on account of tax evasion.
Sources said an investigation is on against others who have not yet deposited service tax. As the service tax and other additional cess are being recovered for the financial year 2006-07 , a post-trip bill from your tour operator should not surprise you. The coverage of service tax is being widened with more services being brought under the tax net. The government has simultaneously decided to widen its audit activities starting April 2008 and cover industries such as cargo handling and packaging, outdoor caterers, mandap keepers , custom house agents, computer training institutes, broadcasting agencies, event management firms, tour operators and architects, besides the usual like banking, financial, insurance , BAS, management consultancy, real estate, IPR etc.
In the club category, the Delhi commissionerate had booked some major clubs early this year, including the Delhi Gymkhana which was slapped a tax evasion notice of Rs 3 crore.
Already, foreign airlines have been made to pay for service tax on their premium travel in India. British Airways had to cough up Rs 107 crore while German carrier Lufthansa had to shell out more than Rs 5 crore.