HC redifines extra commission retained by travel agents

Mumbai: In a ruling that could severely hit the revenues of international airlines, the Delhi High Court has said that supplementary commission retained by the travel agent is not commission within the meaning of section 194H and is liable for tax to be deducted at source (TDS).
The judgment delivered last month was in response to the appeals filed by 12 airlines — Singapore Airlines, KLM Royal Dutch, Pakistan International Airlines, Kuwait Airways, Air France, Thai Airways International Public Co Ltd, British Airways, Air India, Belair Travels and Cargo and United Airlines. Both Kuwait Airways and Air France had filed two appeals on a similar issue.
Supplementary commission is paid when the airline supplies blank tickets to travel agents in bulk for on-selling to customers. This is different from the standard commission received by travel agents from an airline, which is on the basis of the total volume of business.
Section 194H, which deals with commission or brokerage, and states that any person, who is responsible for paying, on or after the 1st day of June, 2001, to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, deduct income-tax thereon at the rate of ten per cent.
07/05/09 Anindita Dey/Business Standard

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Categories: Indian Aviation- In General May 2009