Abatement Rate Increased For Service Tax On Packaged Tours

New Delhi: The Government has increased the abatement rate for levy of service tax on the packaged tours given by tour operators. The abatement rate has been hiked from the current level of 60 per cent to 75 per cent and a notification to this effect was issued by the Finance Ministry. Currently, services given by tour operators, in relation to a tour, attract service tax under Tour Operators Service. At present, a tour operator, giving package tour that comprises provision of transportation and accommodation for stay, is liable to pay service tax on 40 per cent of the gross amount charged for such tour. Under the new dispensation, a tour operator will be needed to pay service tax only on 25 per cent of the gross amount charged on packaged tour. However, the gross amount charged should comprised cost of accommodation, food, transport arrangement, tourist guide, entry to monuments and other similar categories of expenditure.