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Travel agents want airlines to bear the goods and service tax liability on commission and productivity-linked bonuses paid to them.
The payment of commission attracts 18 per cent tax and the agents want the airline to pay the amount.
Earlier this month the Travel Agents Federation of India (TAFI) wrote to all airlines on this issue. "We are supposed to collect GST on incentives paid to us and deposit it with the government. We want the airlines to pay the amount and claim input credit for GST payment made to agents. We have not received a formal response from airlines on our request but a few of them have verbally agreed to take the GST liability," said an executive committee member from TAFI.
So far only Qatar Airways has informed agents that it will pay 18 per cent GST in addition to productivity linked bonus which is paid annually. On the other hand Swiss International Airlines has indicated that the incentive paid to the agents will be inclusive of the tax component.
Agents' commissions have been thinning over the years and over 60 per cent of airlines do not pay a regular commission and pay productivity linked incentives only. Now the agents are demanding that airlines bear the tax so that they do not suffer a loss.
"Ideally the tax should be calculated over and above the commission amount. The airlines however have been relying on a service tax rule which allows for subsumption of the tax in total gross amount (in this case commission) charged for the service," said Anita Rastogi, partner (indirect tax and GST), PwC.