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Book flights in J&K and save on tax

india Updated: Jul 01, 2006 00:02 IST

TOUR OPERATORS in Lucknow are getting airline tickets for international destinations for business and executive class passengers issued from travel agents in Jammu & Kashmir. Reason? The Union Government had exempted travel agents in Jammu & Kashmir from payment of an additional 12.22 per cent service tax imposed on business and executive class passengers. The additional service tax got leviable on May 1, 2006. This is apart from the 1.22 per cent service tax already being levied for all business and executive class airline tickets for international routes in the country.

The modus operandi followed by the tour operators to circumvent the additional service tax dragnet is to ask a Delhi-based travel agent to contact their counterparts in Jammu & Kashmir and get an airline ticket issued from that state for passengers in Lucknow. The tickets are later delivered by agents via courier to a tour operator in the city. Some travel agents have even gone further with tickets being booked for all ex-Delhi or Mumbai international routes abroad for foreign destinations and then, having them couriered to India to the business and executive class passengers.

To cite an example, a Delhi-London fare for a business class ticket costs Rs 1.84 lakh with a service tax of Rs 2,245 levied before May 1, 2006. The business and executive class passengers are now being asked to pay an additional  Rs 2,476 on international routes.

“About 50 per cent of the airline tickets issued for business and executive class passengers even from Lucknow is in the corporate segment. Since May 1, 2006, a large chunk of the business class passengers in the city have started opting reluctantly for economy class tickets or are using the ‘Jammu & Kashmir’ option to avoid paying additional service tax on their tickets,” Vivek Pandey, Regional Head (UP & Uttaranchal) for Delhi Express Holidays told HT Lucknow Live.

He said that there is high level of resentment among both tour operators and business travellers regarding the additional service tax burden imposed on business and executive class fares on international routes.

“Every third passengers who steps into our office has been expressing anger over the new tax burden while saying that business travellers go abroad on corporate work and not for leisure as is being believed by honchos in the Union Finance Ministry,” Pandey said. “On an average, about 50 business and executive class tickets get issued by tour operators from Lucknow itself every month. The figure for the entire UP region could be upwards of 500 tickets per month if one includes Noida and Greater Noida,” he said.

“The cross-border sale of tickets to avoid service tax is bound to become rampant as passengers would find new ways to avoid taking the new tax burden on airline tickets,” Pandey added.