Special service tax rate/optional service tax rate for air travel agents, life insurance business, money changer and lottery organization under service tax
1) Air travel agents
i. At normal rates on the amount of commission received from the airline companies i.e. at the 12%
ii. At special rates on the basic fair of tickets i.e.
- On domestic booking = 0.60% of basic fair
- On international booking = 1.20% of basic fair
Subject to condition that option once exercised shall apply uniformly in respect of all the bookings of passage for travel by air made by him and shall not be changed during a financial year under any circumstances.
2) Life insurance business
|When break up of gross premium into risk portion and investment portion is given to the policy holder at the time of providing||Payment of tax on that portion of the premium attributing towards risk component.|
|When above – mentioned break-up is not given to the policy holder||Payment of service tax @ 3% of the gross premium in the first year and 1.5% in the subsequent years.|
However, according to proviso to rule 6(7A) the benefit of optional rate shall not be available in cases where entire premium paid by the policy holder is attributing towards the risk premium component only. So if the entire premium is paid by the policy holder only towards the risk cover in life insurance then service tax liability to be discharged on the gross premium at the prevailing rate of service tax.
3) Money changer services
|S No.||Quantum of currency exchanged||Composition rate of service tax|
|1||Up to Rs 100000/-||0.12% of the gross amount of currency exchanged, subject to minimum amount of Rs 30/-|
|2||An amount exceeding Rs 100000/- and up to Rs 1000000||Rs 120/- [calculated @ 0.12% on first Rs 100000] plus 0.06% [on the remaining balance] of the gross amount of currency exchanged.|
|3||An amount exceeding Rs 1000000/-||Rs 660 [ calculated on first Rs 1000000 ]plus 0.012% [on the remaining balance ] of the gross amount of currency exchanged, subject to minimum of Rs 6000/-|
4) Service of promotion, marketing or organizing in any other manner assisting in organizing lottery
|S. No.||Rate of optional service tax||Essential condition to be compiled|
|1||Rs 7000/-on every Rs 10 lakh ( or part of Rs 10 lakh) of aggregate face value of lottery tickets printed by the organizing state for a draw||If the lottery or lottery scheme is one where guaranteed prize payout is more then 80%|
|2||Rs 11000/- on every Rs 10 lakh ( or part of Rs 10 lakh) of aggregate face value of lottery tickets printed by the organizing state for a draw||If the lottery or lottery scheme is one where guaranteed prize payout is less then 80%|
by C.A. Deepika Pamecha