New Delhi, Aug. 25: Tour operators who spin out package holidays to exotic destinations in the country have a reason to thank the ministry of culture.

The ministry has persuaded the finance department to reduce the service tax the operators have to pay for such tours.

While the operators were earlier required to pay service tax on 40 per cent of the gross amount charged on a package trip — which includes travel, accommodation and a guide — they will now have to pay tax on 25 per cent of the total cost.

“The government has now given us an extra 15 per cent as rebate,” said Ashwini Kakkar, the president of the Travel Agent Association of India, about the notification issued by the finance ministry on Thursday. “This will provide tour operators a level playing field. In the spirit of competition, it may result in customers benefiting from this move, too.”

The incentive, however, seems to have elicited mixed reactions from tour operators, who had been clamouring for no tax or at least an increase in the rebate to 90 per cent.

“I am out of the fire, but am still in the frying pan,” claimed Subash Goyal, the chairman of STIC Travel Group.

Goyal, a big tour operator, insisted that there was no way the customer would benefit.

“The move has ensured that if tour operators were going to die in a year, they now have an extra year to live. Small tour operators are already running at a loss,” he said.

The tax sop followed a letter culture minister Ambika Soni wrote to finance minister P. Chidambaram a year ago.

The tourism ministry also made a presentation to representatives of the advisory committee on service tax abatement.

The committee then recommended a 75 per cent rebate on service tax for package tours where expenses incurred on accommodation, food, transport, guide and entry to monuments are part of the gross amount charged.