GST Audit of Tour and Travels: key Issues
After completion of lockdown in the country, we, CA professionals, will be required to comply with provisions of different laws and one of due date which is near in corner is GST audit of F.Y. 2018-19. In this article, I am trying to cover all the provision in very simplified manner which is generally applicable while doing the GST audit of tour and travels.
Different services which are offered by Tour & Travel Industry and earn their income
- Tour packages
- Commission received from Hotels bookings
- Commission received from Air tickets bookings
- Commission received from Railway booking
- Car Rental services/Travel Insurance
- Miscellaneous services like providing of Visa, Passport
GST provisions applicable to tour packages:
There are two types of packages which is offered by operator
- a) Inbound Tour- This tour is within India offered for the tourist coming from abroad.
- b) Outbound Tour- This tour is outside India for person going to abroad.
Place of supply & its taxability
|Type of Supply||Basis||POS||Taxability|
|Inbound Tour||Principal Basis||Location of Performance of service||Taxable @ 5% without ITC|
|Inbound Tour||Commission Basis||Location of service provider||Taxable @ 18% with ITC|
|Outbound Tour||Principal to Principal||Location of Service Receiver||Taxable @ 5% without ITC|
|Outbound Tour||Commission received from other tour operator who is situated outside India||Place of Tour Operator||Taxable @ 18% with ITC|
|Outbound Tour||Outbound Tour sold to another Foreigner to visit another country other than India & amount is received in foreign Currency||Outside India||It is exempt from Tax|
GST provisions applicable to Hotel Bookings:
- Commission charged from customer
|Where customer is Located||Registered under GST?||POS||Taxability|
|In India||Customer is registered||Location of Service Receiver||Taxable @ 18% with ITC|
|In India||Customer is not registered||Address is available then Location of Service Receiver||Taxable @ 18% with ITC|
|Out of India||NA||Location of Hotel||Taxable @ 18% with ITC|
- Commission received from Hotels
|Type of Supply||POS|
|Domestic Hotel||Location of Hotel|
|International Hotel||Location of service provider|
GST provisions applicable to Air Tickets:
- Commission charged from customer
GST @ 18% is required to be charge on service charges and other charges collected from the passengers.
ITC is available on GST paid on commission/ service charge by an air travel agent.
- Commission received from Airlines
Here tour operator has two choices either he can pay GST @ 18% on commission or he can pay GST as per rule 32(3) of CGST Rule and pay fixed % of basic fare
|Type of booking||Value of Service||Taxable Rate||Effective Rate|
|Domestic Booking||Basic Fare||5%||0.9% of basic fare|
|International Booking||Basic Fare||10%||1.8% of basic fare|
- An air travel agent can pay tax under any of the option on transaction to transaction basis.
- The rules do not bind the travel agent to opt for any of the options uniformly throughout the given financial year.
GST provisions applicable to Car rental services:
Place of supply:
If the service provided to a person located in India then the place of supply shall be the location service recipient.
GST applicable for renting of motor vehicle shall be @ 5% with no ITC or 12% with ITC.
GST provisions applicable to Miscellaneous &Travel Insurance:
All other services is attracted GST @18% except specifically exempted by way of notification.
Author is CA & currently associated as partner with M/s. SSRPN & Co, Nagpur. She is regular writer and speaker on GST. For any queries and feedback you can reached to the author at email@example.com & firstname.lastname@example.org.