GST on Travel agents and Tour operators
Tourism plays a significant role in the Indian economy, providing several socioeconomic benefits. Tourism has a positive economic impact on other industries associated with food manufacturing, services, construction, and foreign exchange, besides giving employment, income, and foreign exchange to the country. As a result of investments in infrastructure such as transportation infrastructure, accommodations, and other tourism-related services, the country’s economy is developed overall.
Tours operators” are persons engaged in the planning, scheduling, organising, and arranging of tours (including accommodations, sightseeing, or other similar services) by any mode of transportation. Tour operators include anyone who operates tours as a business.
GST on Different Types of Income Sources for a Travel Agent/Company
A travel agency/agent may earn his/her commission from two major sources: the actual service provider (airlines, hotel, etc.), and the customer, and therefore, will produce two different invoices, as follow
GST on Air Ticket Booking Services by Agents
1.Air travel agents are required to pay 18% GST on commission earned from airlines and also service charges, handling charges etc. (by whatever name called) collected from the customers/ passengers.
2.Air travel agents can avail ITC on input services to support the output services of travel agents.
3.ITC is available on GST paid on commission/ service charge by an air travel agent.
Commission/incentive paid by the airline company
In case of Domestic ticket – 5% of basic fair
In case of International ticket – 10% of basic fair
GST on travel agents commission is charged at the rate of 18%.
The type of GST (CGST/IGST/SGST) to be imposed on the commission income of a travel agent depends on the location of supply.
Customer located in India & registered under GST: location of the customer
Customer located in India, not registered under GST, but address available: location of the customer
Customer address not available: location of the agent
GST on the Sale of Tour Packages
Inbound Tours: Tours organized by the Tour Operator, within India for the tourist coming from abroad is generally known as inbound tours.
In Inbound Tour:
- If tour is on Principal basis then the place of supply shall be location of performance of service i.e. in India & Taxable @ 5% without ITC.
- However if the tour is on Commission basis then place of supply shall be location of Service Provider i.e.in India but taxable @ 18% with ITC
Outbound Tours: Tours organized by the Tour Operator, outside India, for the tourist going abroad is generally known as outbound tour.
For outbound tour packages being offered to a person based in India, the location of supply will be the location of the service receiver.
For outbound tour package offered to a foreigner for visiting another foreign country, there is no GST charged on the commission received in convertible foreign currency.
Travel Related Service like VISA, Passport etc by an Agent or Company
All govt fees & consular charges paid on behalf of the consumer/client are outside the preview of GST.
Service charge on the above service shall be subject to GST @ 18%.
If the service is outsourced from another service provider GST Paid on agent invoice can be claimed as ITC & difference amount can be paid to govt.
GST on Booking of Hotel/Cruise by Agent
In case of domestic hotel, the location of the hotel shall be the place of supply. And in case of international hotel booking, the place of supply shall be the location of the service (booking) provider (agent/company).
For hotel booking services, GST will also be charged on the commission received from passengers.
GST on Commission of Rail Travel Agents
18% GST is levied on the service charge (commission) collected by a rail travel agent from the customer.
No commission is paid by the railways to such agents, and therefore no GST is levied in this case.
Car Rental Services
GST applicable for renting motor vehicle shall be at 5% without ITC or at 12% with ITC
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