ALTERNATIVE RATES FOR PAYMENT OF SERVICE TAX :

A. In case of air travel agent [Sub-rule (7)] :

Person liable for paying the service tax in relation to the services provided by an air travel agent, shall have the option to pay following amounts instead of paying service tax at the rate of 14%:-

In the case of	Option to pay an amount calculated at the rate of
Domestic bookings of passage for travel by air	0.7% of the basic fare
International bookings of passage for travel by air	1.4% of the basic fare

Points to be noted
1. The option once exercised, shall apply uniformly in respect of all the bookings of passage for travel by air made by him and shall not be changed during a financial year under any circumstances.

2. For the purposes of this sub-rule, the expression “basic fare” means that part of the air fare on which commission is normally paid to the air travel agent by the airline.

B. In case of insurer carrying on life insurance business [Sub-rule (7A)]

An insurer carrying on life insurance business shall have the option to pay tax:

(i) on the gross premium charged from a policy holder reduced by the amount allocated for investment, or savings on behalf of policy holder, if such amount is intimated to the policy holder at the time of providing of service;

(ii) where amount of the gross premium allocated for investment or savings on behalf of policy holder is not intimated to the policy holder at the time of providing of service: –

First year	at 3.5% of the gross amount of premium charged
Subsequent year	at 1.75% of the gross amount of premium charged

towards the discharge of his service tax liability instead of paying service tax at the rate of 14%. Option not available in certain cases: Such option shall not be available in cases where the entire premium paid by the policy holder is only towards risk cover in life insurance.

Life insurance business: means the business of effecting contracts of insurance upon human life, including any contract whereby the payment of money is assured on death (except death by accident only) or the happening of any contingency dependent on human life, and any contract which is subject to payment of premiums for a term dependent on human life and shall be deemed to include- (a) the granting of disability and double or triple indemnity accident benefit, if so provided in the contract of insurance, (b) the granting of annuities upon human life, and (c) the granting of superannuation allowances and annuity payable out of any fund applicable solely to the relief and maintenance of person engaged in any particular profession, trade or employment or of the dependent of such person [Rule 2(1)(ccb)].

C. In case of sale/purchase of foreign currency including money changing [Sub-rule (7B)]

Person liable to pay service tax in relation to purchase or sale of foreign currency, including money changing, has an option to pay an amount at the following rates instead of paying service tax at the rate of 14%:-

S.No.	For an amount	Service tax shall be calculated at the rate of
1.	Upto Rs 100,000	0.14% of the gross amount of currency exchanged or Rs35 whichever is higher
2.	Exceeding Rs1,00,000 and upto Rs 10,00,000	Rs140 + 0.07% of the (gross amount of currency exchanged-Rs 1,00,000)
3.	Exceeding Rs 10,00,000	Rs770 + 0.014% of the (gross amount of currency exchanged-Rs 10,00,000) or Rs 7,000 whichever is lower

Option not available in certain cases: However, the person providing the service shall exercise such option for a financial year and such option shall not be withdrawn during the remaining part of that financial year.

D. In case of service of promotion, marketing or organising/assisting in organising lottery [Sub-rule (7C)]

An optional mode of payment of service tax has been provided for the taxable service of promotion, marketing or organising/assisting in organising lottery in the following manner instead of paying service tax at the rate of 14%:-

Where the guaranteed lottery prize payout is > 80%	Rs 8200/- on every Rs 10 Lakh (or part of Rs 10 Lakh) of aggregate face value of lottery tickets printed by the organising State for a draw.
Where the guaranteed lottery prize payout is < 80%	Rs 12,800/– on every Rs 10 Lakh (or part of Rs 10 Lakh) of aggregate face value of lottery tickets printed by the organising State for a draw.

Points to be noted:-

1. In case of online lottery, the aggregate face value of lottery tickets will be the aggregate value of tickets sold.

2. The distributor/selling agent will have to exercise such option within a period of one month of the beginning of each financial year. The new service provider can exercise such option within one month of providing the service.

3. The option once exercised cannot be withdrawn during the remaining part of the financial year.

(a) Draw: means a method by which the prize winning numbers are drawn for each lottery/lottery scheme by operating the draw machine or any other mechanical method based on random technology which is visibly transparent to the viewers [Rule 2(d) of the Lottery (Regulation) Rules, 2010]. (b) Online lottery: means a system created to permit players to purchase lottery tickets generated by the computer or online machine at the lottery terminals where the information about the sale of a ticket and the player‘s choice of any particular number or combination of numbers is simultaneously registered with the central computer server [Rule 2(e) of the Lottery (Regulation) Rules, 2010]. (c) Organising State: means the State Government which conducts the lottery either in its own territory or sells its tickets in the territory of any other State [Rule 2(f) of the Lottery (Regulation) Rules, 2010].