In a major relief to tour operators, the government yesterday announced that it would extend limited service tax exemption to transport companies for the period April 1, 2000 to February 4, 2004.

In a notification issued today, the Finance Ministry said the decision has been taken to charge service tax only on 40 per cent of the contract amount of tour operators for the said period.

The decision has been taken after representations were made by transport operators and bus owners operating regular point to point tours for passengers between different cities under contract carriage permits.

The Central government has decided to extend the benefit of abatement of 60 per cent from gross value of contracts to tour operators for period April 1, 2000 to February 4, 2000, said an official statement.

Transport operators had pointed out that they have been asked to pay service tax on 100 per cent of the gross amount charged by them with effect from April 1, 2000, though service tax should be charged only on the commission earned.

After the notification, they will now have to pay service tax only on 40 per cent of the contract amount.

Notably, the ministry has already provided 60 per cent abatement from the gross value in respect of taxable service packaged tours since July 9, 2004.