Giving relief to tour operators, the government today increased the rate of abatement to 75 per cent from 60 per cent for the purpose of levy of service tax.
As a result of the notification (issued today), the tour operator is required to pay service tax only on 25 per cent of the gross amount charged on such package tour, an official release said.
Earlier, the tour operators were required to pay service tax on 40 per cent of the gross amount including cost of accommodation, food, transport arrangement, tourist guide, entry to monuments and other expenses.
The government has issued notification after a presentation made by tourism minister ambika soni to the advisory committee on service tax abatement in mid-july. The committee after examining the request made by the tourism ministry recommended 75 per cent abatement on package tours.
The indian association of tour operators (iato) has been demanding reduction in incidence of service tax to encourage tourism industry in the country.