Financial Daily from THE HINDU group of publications
Wednesday, Mar 26, 2003
Financial Daily from THE HINDU group of publications Wednesday, Mar 26, 2003 |
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Industry & Economy
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Income Tax TDS on fare differential — Travel agents get notice Nina Varghese
CHENNAI, March 25 THE taxman is adding to the woes of the travel business. Travel agents across the country have received an additional debt memo from airlines asking them to pay tax deducted at source (TDS) on the difference between published fare and net fare (what the customer actually paid). The Travel Agents Association of India (TAAI) has asked its members not to pay the additional amount. TAAI has also instructed its members to inform the airlines that the last date for filing the income returns for the year 2001-02 is already over. According to sources, the problem is directly linked to the different airfares in the market. There is a published fare, which no one pays. Then there is the net fare, discounted, which the majority pay, and then there is a net net fare (discount plus incentive), which is what the person in the know pays. What the tax authorities are now asking the airlines to pay could, depending on the class of travel, be higher than Rs 20,000 per ticket. The Board of Airline Representative (BAR) in India has sent a letter to TAAI, saying the Income-Tax Department has not granted any further extension of stay of demand and is not in the process of taking recovery action and has demanded payment from the member-airlines. The airlines, the letter stated, have been threatened with action such as freezing of bank accounts, if they do not comply with the requirement and make payments for the period June 1, 2001 to March 31, 2002. "In case the airlines are forced to make payments to the disputed TDS amounts to the Income-Tax Department, they would be left with no choice but to make recovery from the agents as was agreed to at a meeting between TAAI, TAFI (Travel Agents Federation of India), BAR (I) on March 15, 2002," it said. The airlines are continuing their dialogue with the CBDT (Central Board of Direct Taxes) on the subject. In the event of a positive response, they have promised to reimburse the amount to the agents, the letter said.
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