Clarification regarding point of Taxation for air tickets

Service Tax Department has noticed that some airlines are collecting differential service tax on tickets issued before 1^st April 2012 for journey after 1^st April 2012, causing inconvenience to passengers. Department has received representations in this regard. In this regard, a circular has been issued by the Department clarifying the point of taxation. following are the details:

Rule 4 of the Point of Taxation Rules 2011 deals with the situations of change in effective rate of tax. In case of airline industry, the ticket so issued in any form is recognised as an invoice by virtue of proviso to Rule 4A of Service Tax Rules 1994. Usually in case of online ticketing and counter sales by the airlines, the payment for the ticket is received before the issuance of the ticket. Rule 4(b)(ii) of the Point of Taxation Rules 2011 addresses such situations and accordingly the point of taxation shall be the date of receipt of payment or date of issuance of invoice, whichever is earlier. Thus the service tax shall be charged @10% subject to applicable exemptions plus cesses in case of tickets issued before 1^st April 2012 when the payment is received before 1^st April 2012.

In case of sales through agents (IATA or otherwise including online sales and sales through GSA) the payment is received by the agent and remitted to airlines after some time.  When the relationship between the airlines and such agents is that of principal and agent in terms of the Indian Contract Act 1872, the payment to the agent is considered as payment to the principal. Accordingly as per Rule 4(b)(ii), the point of taxation shall be the date of receipt of payment or date of issuance of invoice, whichever is earlier. Thus the service tax shall be charged @10% subject to applicable exemptions plus cessesin case of tickets issued before 1^st April 2012 when the payment is received before 1^st April 2012 by the agent.

However, to the extent airlines have already collected extra amount as service tax and do not refund the same to the customers, such amount will be required to be paid to the credit of the Central Government under Section 73A of the Finance Act 1994 (as amended).

Due dates for Statutory Compliances under labour enactments – March, 2012

Enactment	Description of returns / actions to be taken	Last date of submission of returns / action to be taken
Employees Provident Fund Act, 1952	Remittance of P.F. contributions and submission of Form 2 for nomination	On or before 15th March, 2012
	Submission of monthly returns in Form 5, 10 & 12A	On or before 25th March, 2012
	Submission of monthly statement IW – 1 relating to details of employees qualifying for membership as International workers along with Form 5 (for unexempted) / Form 4 (for exempted)	On or before 15th March, 2012
Employees State Insurance Act, 1948	Remittance of ESI payment	On or before 21st  March, 2012
Profession Tax Act	Submission of Form 5 and remittance of tax	On or before 20th March, 2012
Apprentice Act	Submission of report in Form App.6 in respect of Graduates and Technician Apprentices	On or before 31st  March, 2012

Due dates for Statutory Compliances – January, 2012

Enactment	Description of returns / actions to be taken	Last date of submission of returns / action to be taken
Employees Provident Fund Act, 1952	Remittance of P.F. contributions and submission of Form 2 for nomination	On or before 15th January, 2012
	Submission of monthly returns in Form 5, 10 & 12A	On or before 25th January, 2012
	Submission of monthly statement IW – 1 relating to details of employees qualifying for membership as International workers along with Form 5 (for unexempted) / Form 4 (for exempted)	On or before 15th January, 2012
Employees State Insurance Act, 1948	Remittance of ESI payment	On or before 21st  January, 2012
	Submission of Annual Information in Form 01-A	On or before 31st  January, 2012
Profession Tax Act	Submission of Form 5 and remittance of tax	On or before 20th January, 2012
Karnataka Labour Welfare Fund Act, 1965	Payment of welfare fund contributions and submission of statement in Form “D”	On or before 15th January, 2012
	Transfer unpaid accumulations and fines to the Welfare Commissioner	On or before 15th January, 2012
Employment Exchange (Compulsory Notification of vacancies) Act, 1959	Submission of quarterly return in Form ER - 1	On or before 31st January, 2012
Karnataka Shops and Establishments Act, 1961	Submission of combined annual return in Form U	On or before 31st January, 2012
Karnataka Factories Rules, 1969	Submission of Form 20 – Annual Return*	On or before 31st January, 2012
Maternity Benefit Act, 1961	Submission of Form K,L & M	On or before 31st January, 2012
Minimum Wages Act, 1948	Submission of Annual Return in Form III under Rule 22(4) of Karnataka Minimum Wages Rules, 1958	On or before 31st January, 2012

* An employer who submits Annual Return in Form – 20 under the Karnataka Factories Rules, or in Form U  under the Karnataka Shops & Establishments Act, such employer need not furnish similar information under other enactments.

Where Annual Return is submitted under Form 20 of the Factories Rules, 1969 such establishments are also exempted from submitting separate return in Form D under the Payment of Bonus Rules. However, Shops & Commercial establishments are required to submit Annual Return in Form D prescribed under the Payment of Bonus Rules, 1975.

Revised minimum wages for Security Guards in Karnataka

The Government of Karnataka has revised the minimum rate of wages for employment in Security Agencies (Industries where office staff appointed by which agency including security guards) vide its notification no. LD -11/LMW/2009 dated 14.09.2011 w.e.f. 01.04.2011. The details of the revised rate of minimum wages as per government notification are as under:

Sl.No	Working Category	Minimum wages rate every month (in Rs.)
		Zone 1	Zone 2
1.	Security Supervisor	5231.46	4949.81
2.	Security Officer
3.	Field Officer
4.	Manager
5.	Security Inspector	4828.00	4736.55
6.	Assistant Security Officer
7.	Head Guard	4649.31	4348.57
8.	Intelligence & Fire Fighting	4459.91	4376.75
9.	Security Guard
10	Assistant
11	Lady Guard / Lady Nurse
12	Supervisor	4646.46	4601.41
13	Accountant
14	Cashier
15	Stenographer
16	Clerk	4553.11	4508.76
17	Typist
18	Receptionist
19	Computer Operator
20	Driver
21	Attender	4343.46	4359.28
22	Office Boy
23	Peon

The revised rate of minimum wages under this notification included cost of living allowance payable on 3944 points. Over and above 3944 points of CPI (1960=100), cost of living allowance has to be paid @ 0.04 paise per point per day as D.A. for all the category of employees.

All conditions of providing other amenities remain the same except the washing allowance which has been revised to Rs. 250/- per month.