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5 frequently asked questions on GST for online travel bookings and cab companies

Last Updated on 29-Jun-2017

The most important change for eCommerce companies including Amazon, Flipkart, Ola, Oyo, Uber etc is the concept of reverse charge. We have discussed about reverse charge in details in this post. A quick read would explain a lot of things about GST for eCommerce.

1. Is there any provision for tax to be paid under reverse charge incase where electronic commerce operator is involved?

Yes, there are provisions and the same are contained in all the laws for GST (be it Central GST, Integrated GST and UT GST). Under these laws power has been given to the government to notify the category of services on which the tax is to be paid under reverse charge.

2. What are the services under which tax is payable under reverse charge incase any electronic commerce operator is involved

There are broadly two types of services notified by government where the tax is to be paid under reverse charge by the electronic commerce operator, these services are
- Services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle. (This relates to Online cab aggregators like Ola or Uber)
- Services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes (This relates to Online Travel Agents like MakeMyTrip or Oyo Rooms)

3. What shall be the rate of tax to be paid by the electronic commerce operator under the reverse charge?

For cab services, the GST rate is 5% whereas for travel booking operators it would depend upon the service that you have consumed. (Different for airlines, budget hotels, luxury hotels etc)

4. Is the tax is payable under reverse charge in all the scenarios for the cab service?

No, the following has to be kept in mind:-
* The services are though electronic commerce operator. (Since the reverse charge is to be paid by the electronic commerce operator)
* The services relate to the transport of passenger and not goods.

5. I booked a room via an Online Travel Agent (say MakeMyTrip) for Taj Hotels ,Delhi GST is charged by Taj Hotels on all the bills but it was supposed to be paid on reverse charge by make my trip isn’t it?

No, the tax would be paid by MakeMyTrip under reverse charge only when the service provider (Taj Hotels) is not registered under the Act. Since in this case the service provider (Taj Hotels) is already registered the tax is to be paid under normal charge and not reverse charge.

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About the author

Ankit Gupta

Ankit Gupta, CA (Chartered Accountant) has spent considerable time in the industry providing solutions to the business fraternity. His early career saw him working in top level CA firms and US multinationals where he polished his understanding of finance and law. An alumni of Shaheed Bhagat Singh College (Delhi University), he has since spent time working with numerous services companies, traders, retailers and manufacturers. Being a keen follower of technology, he spends considerable time exploring technology solutions for the Indian businesses. Apart from work, he loves spending time with his wife & son.