Traveling is favoured by all some people like to travel domestically and others prefer to travel abroad. But before travelling, everyone used to plan their trip at their convenience, however, sometimes they ignored the other related expenses such as GST rates on services by travel agents and tour operators. It is due to that we are familiar with the GST council has initiated distinct rates for distinct sorts of expenses pertinent to travel.
The blog focuses on what are the compliance required to be followed, what is the process for travel agents and what are the major differences between tour operators and travel agents. We shall learn about the reasons for the variation in the GST rate with the SAC code that they supply before consumers.
Explanation of a Travel Agent
A travel agent organizes travel for end clients (individuals, groups, corporations) on behalf of suppliers (hotels, airlines, vehicle rentals, cruise lines, trains, travel insurance, package tours). His commitment is to ease the process of holiday planning for their consumers and to provide consultancy services and complete travel packages.
Read Also: GST Impact on Hotel and Tourism Industry After Rate Cut
An agent can be self-employed, work for an independent travel agency, or be a member of a travel agency group. Agents usually collect a 10 to 15% commission from lodgings, transportation companies, and interests for handling trip bookings.
Comparison B/W Tour Operators and Travel Agents
| A Tour Operator | A Travel Agent |
|---|---|
| A tour operator is a person/company that conducts vacations and vacation packages. | A travel agent is a respective broker or agency that sells vacation packages and the travel agent is an intermediary who sells them. |
| The tour operator creates the services. | Travel agencies buy holiday packages from tour operators and sell them to tourists. |
| A tour operator ensures that a tourist enjoys the vacation package they have reserved. | A travel agent deals with clients who choose if and which vacation to venture on. |
| Tour agents ensure that they have a good time on their vacation. |
Threshold limit of GST registration for Tour Operators and Travel Agents:
Every tour operator with a turnover exceeding Rs. 20 lakhs in the previous financial year should have the GST registration. The maximum turnover is Rs. 10 lakhs for distinct categories or states.
Tour Operators in states:
| Arunachal Pradesh | Assam | Himachal Pradesh |
| Jammu & Kashmir | Manipur | Meghalaya |
| Mizoram | Nagaland | Sikkim |
| Tripura | Uttarakhand |
They should register for GST and file a GST return if their annual turnover is more than Rs 10 lakh.
The turnover limit is not applied every time. For instance, when an individual performing an interstate taxable supply, an individual as an operator or otherwise furnishes the goods or services or both levied to taxes on behalf of another taxable individual like as an air travel agency, should receive GST registration in India.
The Source of Supply Location
E.g.- When a hotel or cruise pays the agent
- If the hotel or cruise is situated in India, its point of sale shall be on the location of the hotel or cruise.
- The POS of an agent will signify the location of an agent if the hotel or cruise is situated outside of India.
| Tour Agent Location | Hotel Location | Place of Supply of Travel Agent | Tax to be Levied |
|---|---|---|---|
| Gujarat | Delhi | Delhi | IGST |
| Gujarat | Up | Up | IGST |
| Gujarat | London | Gujarat | CGST+SGST |
GST Rate Applies on Travel Agents
Travel agents need to levy 18% GST on their commission but, when the agent furnsihes the air transportation services, the GST is levied under Rule 32 of the VGST Rule 2017.
Under CGST Rule 32(3), the value of the services yielded by an air travel agency in association with the booking of airline tickets will be decided at the rate of
- Domestic booking:- 5% of the basic fare
- International booking:- 10% off the basic fare
GST levied to Air Travel Agent:
A Commission from Airline:
- Domestic Air Ticket – GST @18% on 5% of Basic Fare
- International Air Ticket – GST @ 18% on 10% of Basic Fare
B Service levied from clients:
- GST at the rate of 18% on Service Charge and others.
GST Rate and SAC Code on Travel Agents Services
| Explanation | SAC Code | GST rate |
|---|---|---|
| Services that a foreign visitor receives from a tour operator for a trip that is entirely undertaken outside of India. | 9985 | Nil |
| Sale of Tour Packages | 998552 | 5% |
| Rent-a-Cab Service | 9967 | 5% |
| Air Ticket Booking Services by Agents | 998551 | 18% |
| Service Charge Paid on Travel-Related Like Visa, Passport, etc | 998555 | 18% |
| Commission of Rail Travel Agents | 9967 | 18% |
| Other Renting Services | 998559 | 18% |
| Hotel Booking or Cruise by Agent | 998552 | 2%-18% with ITC or 5% without |
Closure: The aforesaid explanation signifies that all the services provided to the customers via the travel agents are obligated to taxes under the GST taxation system. It is because you might plan your upcoming vacation budget, and must ensure to include the GST that your travel agent levies you for the services they furnished.
I am an inbound tour operator, please advise me on invoice (Option 01 or Option 02), if i make a hotel booking (on no commission basis).
Suppose net rate received from the hotel is INR 5000 + 12 % GST and I add my profit 500 in this.
1) An invoice of INR 5500 + 12% GST to claim GST input.
2.) An invoice of INR 6100 + 12% GST (INR 5000 + 12% GST + INR 500)
and also advise where 18% GST will levied by me to claim GST input in both the options.
Thanks,
i am a travel agent, if i booked tickets thru makemytrip or cleartrip and added the gst number while booking and if we get the invoice from airlines like indigo or vistara shall travel agent can claim gst input from airline invoice.
Pls update.
Hi dhruv, its depend on your category choosen on gst like comission basis or gross, if you working oin commission basis, no itc availed, if working on gross basis with subject to condition coming under tour package, then itc wil b open