With a view to address the increasing cyber crime threat and service tax issue to travel agents, Enterprising Travel Agents Association (ETAA) recently organised a knowledge session on service tax and cyber crime for its members at Novotel Mumbai Juhu Beach Hotel. Service tax expert Sunil Gabhawalla of S B Gabhawalla & Co gave a brief on the negative list regime of service tax introduced on July 2012 and the issues pertaining to it. For instance, the reverse charge mechanism (RCM) was introduced with the introduction of the negative list regime of service tax. Explaining the reverse charge mechanism, Gabhawalla stated, “One has to be careful about RCM. You need to check whether your client is a corporate entity or not, as corporate entities would have to pay their own taxes while for non-corporates, you need to pay. Those travel agents who liaise with rent a cab operators end up paying more service tax, if one client is a corporate entity and the other a non-corporate.” He went on to highlight the inefficiency in CENVAT Credit. “Even if travel agents do not get service tax from their clients, they would still have to pay.”
Speaking on cyber risks and the legal compliance for travel agents, Vicky Shah, advocate and founder, The Eagle Eye informed, “Only 65 countries have cyber laws. Of these, India has signed treaties with most countries. Since travel agents do business online they can seek remedy from countries which have cyber laws if the information provided by them is misused.”
Highlighting the major concerns of cyber threat for travel agents, Shah stated, “A travel agent can incur a financial liability of up to `five crore for failing to protect the personal data of his customer. It can also lead to civil and criminal liability. However, to avert cyber risks you can have service level agreements with agents, agreements with customers and clients, agreements with overseas agents, and tie-ups with associates/single agents, etc.” He also advised the travel agents to have an IT Security Policy in place which has a duration of three to five years.