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GST on Tours and Travels: HSN Code and GST Rate on Travel Agents Services

Updated on : Jun 16th, 2023

Depending on whether input tax credits (ITC) are available, there are now two separate rates of GST on tours and travels. Without the option of an ITC, a 5% GST is applied to the gross tour price, while an 18% GST rate is applied with ITC. These various rates have an impact on the total pricing for both travellers and tour operators.

Continue reading to learn more about tours and travels HSN code, and GST on travel agents.

Scope of taxation on tours and travels 

The  Goods and Services Tax (GST) regulations provide tour operators with three different ways to operate and claim input credits.  Input tax credit (ITC) in GST refers to the tax amount that businesses can subtract from the tax owed on the purchase of goods and services.

Here is a detailed explanation:

• Acts as a tour operator with no ITC:  A tour operator charges 5% GST to the customer on the total package but does not claim any ITC. 
• Acts as a tour operator and claim ITC:  The tour operator charges 18% GST to the customer on the total package and claims ITC. Although, it is important to consider the place of supply rule when claiming ITC. 
• Acts as a pure agent:  The tour operator acts as an intermediary and raises an invoice to the customer charging 18% GST. However, the entity's role is that of a facilitator, and the actual expenses incurred for services like travel, hotel, and boarding are separately mentioned on the invoice and taken as reimbursements from the customer. The tour operator must maintain proper records of these expenses.

Value of supply for GST on tours and travels

If a tour operator works as a pure agent, then they can exclude the expenses incurred by the service provider from the value of their supply . This allows for a more accurate determination of the tax liability and ensures that the tax is levied only on the actual service provided by the pure agent.

Time of supply for GST on tours and travels

The  time of supply for GST depends on whether the tour operator is acting as a pure agent or not. 

If they are not acting as a pure agent, the GST should be charged and paid at the time of payment or issuance of the invoice, whichever occurs earlier. In such cases, the tour operator should recognise its revenue on a payment basis for GST purposes.

However, if the tour operator opts to act as a pure agent, the GST should be charged at the time when the final invoice is raised or when the commission is received, whichever happens, earlier. 

Place of supply for GST on tours and travels

When making a hotel reservation, the  place of supply is the city in which the hotel is located, and the hotel will include GST in its invoice. However, the company cannot claim ITC on that specific invoice if it is not registered for GST in the place of supply.

The same applies to flight tickets, where the place of supply is the place of flight departure. If the tour operator is not registered under GST in the state from which the flight departs, ITC cannot be claimed for that invoice.

GST on tours and travels with HSN code

Under Heading 9985 of the GST Tariff Act, the applicable GST rate for tours and travel services is 5% if the following conditions are met. 

• The tour operator providing the services will not be eligible for ITC on services like hotels, air tickets, etc. However, ITC can be claimed on tour operator services obtained from another tour operator.
• The tour operator must indicate in its invoice that the charged amount is the gross amount and includes charges for accommodation and transportation.

Here is a tabular representation of tours and travels SAC code and GST on travel agents’ services:

Availability of ITC claims on tours and travels GST rate

In case the tour operator chooses to charge GST at the rate of 18% on the total amount, it will be eligible to claim ITC on various services such as rent, professional fees, lease lines, telephone, etc.

Here is a more detailed explanation of ITC availability on tours and travels GST rate:

• Air travel agents can claim ITC on the GST paid for commission or service charges.
• Inbound tour fees charged on a commission basis are subject to 18% GST with ITC.
• ITC can be claimed if the service is outsourced from another agent.
• Hotels charging a commission will have 18% GST applicable, and ITC can be claimed.
• All other renting services are charged at 18% GST, with ITC

Frequently Asked Questions

• Can air travel agents avail for ITC?

Yes, air travel agencies are eligible for an ITC on the GST they paid on the commission they got from passengers or travellers.

• Is GST applicable to the cab service providers like Ola, Uber, etc.?

Yes. According to section 9(5) of the CGST Act, all cab-service companies are required to pay GST.  

• Is a tour operator taxable?

          Tour operators are considered ‘people’, but the brokerage charged by them is taxable. 

• How much GST is on a flight ticket?

The GST on economy flight tickets is 5%, whereas that for business and premium economy is 12%.

About the Author

I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more

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GST Explained for Tour Operators and Travel Agents

Mar 22, 2024

GST on Tours and Travels: HSN Code and GST Rate on Travel Agents' Services

There are now two separate rates of GST on tours and travels, depending on the availability of input tax credits (ITC). Without ITC, a 5% GST is applied to the gross tour price, while an 18% GST rate is applied with ITC. These different rates have implications for both travelers and tour operators in terms of total pricing.

To understand more about the HSN code for tours and travels, as well as the GST on travel agents, read on.

Taxation Scope for Tours and Travels

The regulations of Goods and Services Tax (GST) offer tour operators three different options for operation and claiming input credits. Input tax credit (ITC) in GST refers to the tax amount that businesses can subtract from the tax owed on the purchase of goods and services.

Here is a detailed explanation:

1. Acting as a tour operator without ITC: In this scenario, a tour operator charges customers 5% GST on the total package but does not claim any ITC.

2. Acting as a tour operator and claiming ITC: In this case, a tour operator charges customers 18% GST on the total package and claims ITC. However, it is necessary to consider the place of supply rule when claiming ITC.

3. Acting as a pure agent: The role of a tour operator in this scenario is that of a facilitator. They act as an intermediary, raising an invoice to customers charging 18% GST. The actual expenses incurred for services like travel, hotel, and boarding are separately mentioned on the invoice and taken as reimbursements from the customers. Proper records of these expenses must be maintained by the tour operator.

Value of Supply for GST on Tours and Travels

If a tour operator works as a pure agent, they can exclude the expenses incurred by the service provider from the value of their supply. This enables a more accurate determination of the tax liability, ensuring that tax is levied only on the actual service provided by the pure agent.

Time of Supply for GST on Tours and Travels

The time of supply for GST depends on whether the tour operator is acting as a pure agent or not.

If they are not acting as a pure agent, GST should be charged and paid at the time of payment or issuance of the invoice, whichever occurs earlier. In such cases, the tour operator should recognize its revenue on a payment basis for GST purposes.

However, if the tour operator chooses to act as a pure agent, GST should be charged at the time when the final invoice is raised or when the commission is received, whichever happens earlier.

Place of Supply for GST on Tours and Travels

When making a hotel reservation, the place of supply is determined by the city in which the hotel is located. The hotel will include GST in its invoice. However, if the company is not registered for GST in that specific place of supply, it cannot claim ITC on that invoice.

The same applies to flight tickets, where the place of supply is the place of flight departure. If the tour operator is not registered under GST in the state from which the flight departs, ITC cannot be claimed for that invoice.

GST on Tours and Travels with HSN Code

Under Heading 9985 of the GST Tariff Act, the applicable GST rate for tour and travel services is 5% if the following conditions are met:

1. The tour operator providing the services will not be eligible for ITC on services like hotels and air tickets, but ITC can be claimed on tour operator services obtained from another tour operator.

2. The tour operator must indicate in its invoice that the charged amount is the gross amount and includes charges for accommodation and transportation.

Here is a tabular representation of tours and travels SAC code and GST on travel agents’ services:

Description SAC GST rate

Services provided by a tour operator to a foreign tourist in relation to a tour conducted wholly outside India. 9985 Nil

Air Ticket Booking Services by Agents 998551 18%

Sale of Tour Packages 998552 5%

Service Charge paid on travel-related services like Visa, Passport, etc. 998555 18%

Booking of Hotel/Cruise by Agent 998552 2%-18% with ITC or 5% without

Commission of Rail Travel Agents 9967 18%

Rent-a-Cab Service 9967 5%

Other renting services 998559 18%

Availability of ITC Claims on Tours and Travels GST Rate

If a tour operator charges GST at the rate of 18% on the total amount, they will be eligible to claim ITC on various services such as rent, professional fees, lease lines, telephone, etc.

Here is a more detailed explanation of ITC availability with regards to the GST rate for tours and travels:

- Air travel agents can claim ITC on the GST paid for commission or service charges.

- Inbound tour fees charged on a commission basis are subject to 18% GST with ITC.

- ITC can be claimed if the service is outsourced from another agent.

- Hotels charging a commission will have 18% GST applicable, and ITC can be claimed.

- All other renting services are charged at 18% GST, with IT

Q: Can air travel agents avail of ITC?

A: Yes, air travel agencies are eligible for ITC on the GST they paid on the commission they received from passengers or travelers.

Q: Is GST applicable to cab service providers like Ola, Uber, etc.?

A: Yes. According to section 9(5) of the CGST Act, all cab service companies are required to pay GST.

Q: Is a tour operator taxable?

A: Tour operators are considered 'people', but the brokerage charged by them is taxable.

Q: How much GST is there on a flight ticket?

A: The GST on economy flight tickets is 5%, whereas for business and premium economy, it is 12%.

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GST on Tour Operator & Travel Agents

Radha Dhaked | March 20, 2023 March 20, 2023 | GST

Tourism is a significant contributor to the Indian economy, providing socioeconomic benefits and positively impacting industries like food manufacturing, services, and construction. It creates jobs, generates income and foreign exchange. The tourism and hospitality industry includes accommodations, catering, transportation, attractions, and travel agencies/tour operators. Learn more about the GST on tour and travel agencies below.

Business Models for Tour Operators

Tour operators can use different business models to sell travel-related services and merchandise.

The following are some popular business models for tour operators:

• Tour Package: The tour operator includes their margin in the total fees charged, acting as a service provider that coordinates bookings with various counterparts.
• Pure Agent Tour Operator : The tour operator helps travellers find suitable suppliers and facilitates transactions but only charges for their services, not the end service provided.
• Flight and Hotel Booking with Backend Commission: The tour operator facilitates transactions and bookings without charging customers any fees. Instead, the ultimate supplier pays a commission to generate sales.

GST Registration for Tour Operator & Travel Agents 

Every business in India whose aggregate turnover in a financial year is above Rs 40 Lakhs and Rs. 20 lakhs in special category states will have to get GST Registration Mandatorily.

So, tour operators and travel agents also need to get GST Registration Online as per above GST Registration Threshold Limit.

Furthermore, GST Registration is mandatory, if tour operators and travel agents make  inter-state taxable supply or makes taxable supply of goods or service or both on behalf of other taxable people,

Learn in detail: GST Registration for tour operators  

GST Implications on Various Travel Related Services by Agents

Gst on air ticket booking services by agents.

• 18% GST on commission income, service charges, and other charges collected from passengers
• Input Tax Credit (ITC) available on GST paid on commission/service charge by an air travel agent
• GST on travel agents’ commission is charged at 18%
• The type of GST imposed depends on the location of supply

In addition to this, consider reading: GST on air tickets

GST on Sale of Tour Packages

• 5% GST on tour operator services without ITC
• 5% GST on gross commission/fee charged from the customer
• GST on inbound tour fees charged on Principal basis at 5% without ITC
• GST on inbound tour fees charged on Commission basis at 18% with ITC
• GST on outbound tour packages being offered to a person based in India charged at the location of service receiver
• No GST charged on commission received in convertible foreign currency for outbound tour packages offered to foreigner for visiting another foreign country

GST on Travel Related Services like Visa, Passport, etc. by an Agent or Company

• No GST charged on government fees or consular charges paid for the particular services
• 18% GST levied on Service Charge paid on travel-related services like Visa, Passport, etc.
• ITC can be claimed if the service is outsourced from another agent

Understand in detail: GST on passport and visa services

GST on Booking of Hotel/Cruise by Agent

• Place of supply depends on the location of the hotel for domestic hotel bookings and the location of the service provider for international hotel bookings
• GST charged on the commission received from passengers.
• 18% on Commission received from the hotel. ITC is available.
• If the hotel invoice is not in the name of the client, the tax will be based on the full amount charged for the booking.
• Depending on the situation, the applicable GST rate will either be 12%-18% with Input Tax Credit or 5% without Input Tax Credit.
• However, for international bookings not within the taxable territory, no GST will be charged.

Watch our detailed video at: How GST applies on hotel business?  

Also read: GST Registration for Hospitality Business   

GST on Commission of Rail Travel Agents

• 18% GST levied on service charge (commission) collected from the customer
• No commission is paid by the railways to such agents, and no GST levied in this case.
• The SAC (Service Accounting Code) assigned to Rail travel agents is 9967.

GST on Rent-a-Cab Service

• 5% GST paid by cab operator on service charge collected from the customer on renting of a motor cab, including the cost of fuel
• No ITC available on GST paid
• All other renting services charged at 18% with ITC availability

In conclusion, The Indian tourism industry is vital for the economy, creating jobs and boosting various industries. Tour operators use different business models and must register for GST if their turnover exceeds the threshold limit or as per other GST regulations. GST implications on various services, such as air ticket booking, tour packages, hotel and cruise booking, and rail travel agents’ commission, vary based on a number of factors.

GST on Transportation Sector

Moreover, If you want any other guidance relating to GST Return Filing or  GST Registration , please feel free to talk to our business advisors at  8881-069-069 .

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Travel Agent and Tour Operator Services: GST

April 13, 2023.

If you are a travel enthusiast who enjoys traveling but does not want to deal with the time-consuming process of searching for and booking hotels, transportation, and so on, you may be a travel-agent type of traveler, but you should be aware that your travel budget is not only exceeded by travel commission but GST is also paid for all such services. So you also pay the government. Determine how much of your budget is going to the government in the form of GST.

Definition:

Types of income sources for travel agents and tour operators:, 1. air ticket booking:, 2. hotel booking:, 3. services like visa/passport:, 4. rail ticket booking:, 1. inbound tour: india tour for foreign travelers, 2. outbound tour: foreign tour for an indian/foreigner, conclusion:, frequently asked questions:.

A “Travel Agent” is a person or entity who acts as an intermediary and sells holiday packages and tours. Their services include accommodation, rail/air ticket booking, sightseeing, cab pickup drop, etc. The services they provide are commission based, on which they receive a certain amount of commission which is taxable and falls under the GST regime.

“The Tour operator” is a person or organization responsible for organizing, planning, and scheduling trips and holiday packages. They are brokers who provide such services and charge brokerage or fees for the same. The amount of brokerage is taxable, and GST is applicable to it.  

A travel agency has two significant sources of income from which they can charge commission/service fees by raising an invoice to below mentioned:

1. The airline/hotels – actual service providers

2. Customer/Client

Let us check how much and what % of GST is applicable in either of the above ways.

Chargeable Services of Travel Agents

The chargeable services of Travel Agents are as follows:

1. Air Ticket Booking

2. Hotel Booking

3. Services like Visa, Passport

4. Rail Ticket Booking

Now, let us understand what percentage of GST applies to the services mentioned above:

18% GST will be applicable on the commission received by an agent through the airline as well as the service charges collected from the customer. Now let us understand the bifurcation of GST to be paid on the commission received from Airlines and Air travelers.

• GST on Commission received from Airlines:
• In the case of Domestic Air Ticket – 18% on 5% of the Basic fare.
• In the case of International Air Ticket – 18% on 10% of the Basic fare.
• GST on processing fees received from Air Traveller:
• GST @ 18% on the invoice value from Air Traveller.

GST will be applicable on bookings done through agents or intermediaries. Again, two ways GST will be charged, so let us understand in detail so we can get know which type of GST will be applicable, i.e. ( IGST or CGST + SGST )

• When the Agent receives a commission from the Hotel:​
• If the Hotel is located in India, i.e., domestic, then the place of supply will be the location of the Hotel.
• If the Hotel is located outside of India, the place of supply will be the Agent’s location.

Let us comprehend all of this using an example:

• When the Agent receives a commission from Traveller:

• If a traveler is registered, then the place of supply will be the traveler’s location.
• If the traveler has not registered, the location of the supply will be the Hotel.

Visa and Passport services can be provided in two ways:

• Visa Statutory Authorities:

• If a customer directly approaches Visa Statutory Authorities, then the charges charged by the Statutory Authorities are exempted from GST.

• Visa Facilitation Centres:

• If a visa/passport is obtained from facilitation centers or through a travel agent, then the same shall be taxable. When an air travel agent provides these services by adding his commission, the same will be taxable at 18% GST, and he can take ITC of the tax paid to Visa Facilitation Centres.

A traveler has two ways to book a train ticket. He can book it through a rail travel agent or directly through railways. If he books a ticket through a rail travel agent, then GST will be applicable at 18% on the commission charged by the Agent to the traveler. At the same time, no commission is paid by the railways to the Agent for the booking.

These were the GST on several services provided by the Agent. Now, what about the GST on the Tour operator services or company? They sell entire tour packages and let’s check whether they will be liable to pay GST.

A. If Service provider and Recipient, both are in India:

1. Recipient is Registered – Place of supply will be the location of the recipient.

2. Recipient is Unregistered – Place of Supply will be the location of the recipient, if the address on records exists.

B. If Either the Service Provider or Recipient is outside India:

GST on the Sale of Tour Packages

➢ If the customer is charged on a principal basis for the inbound tour, 5% GST will be charged without benefit to claim ITC.

➢ If the customer is charged on a commission basis for the inbound tour, then 18% GST will be charged with the benefit of claiming ITC.

• If the customer/traveler is made to pay on a principal basis and also registered, the place of supply will be the location of the customer. 
• If the customer/traveler is charged on a principal basis, but is not registered, then the place of supply will be the customer’s location per the service provider’s records.

According to the detailed explanation above, all services provided by travel agents or tour service providers to customers are subject to taxation under the GST tax regime. So, make sure you understand the GST that your travel agent charges you for the services he provides, so you can plan your next trip budget with confidence.

1. What is the full form of ITC?

Ans: ITC means Input Tax Credit.

2. What is the meaning of Input Tax Credit?

Ans: Input Tax Credit is the tax a business can claim to reduce their tax liability to the limit of GST paid on purchases.

3. Can air travel agents avail for ITC?

Ans: Yes, the air travel agents can avail of ITC on GST paid on the commission received from the passenger/traveler.

4. Is GST applicable to the cab service providers like Ola, Uber, etc.?

Ans: Yes, Cab service providers like Ola and Uber are liable to pay GST to the government as per section 9(5) of the CGST Act.  

5. Are Cab drivers liable to get registered and pay GST?

Ans: No, it is not mandatory for cab drivers to register, and they are also not liable to pay any tax.

6. What if I want to avoid claiming ITC? How much GST do I have to pay?

Ans: You are liable to pay 5% GST on the total amount if you want to avoid claiming ITC for CAB rental services

7. What is SAC? And what is the meaning of it?

Ans: SAC code means Services Accounting Code. SAC is applied to all the services provided within India.

8. Why is the SAC code used?

Ans: SAC code is used to bifurcate, identify and determine the type of services provided and the rate of tax to be charged.

9. Why is it necessary to know the place of supply of the Agent?

Ans: Place of Supply will help us to determine the type of supply, i.e. Intra- State or Interstate.

10. What is the complete form of the HSN Code?

Ans: HSN Code means Harmonized System of Nomenclature Codes.  

11. What is the difference between the HSN and SAC codes?

Ans: SAC codes are used for the provision of services, whereas HSN codes are used for the Sale of Goods.

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GST Rates and SAC Codes for Services By Travel Agents

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

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:

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.

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

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.

Disclaimer:- "All the information given is from credible and authentic resources and has been published after moderation. Any change in detail or information other than fact must be considered a human error. The blog we write is to provide updated information. You can raise any query on matters related to blog content. Also, note that we don’t provide any type of consultancy so we are sorry for being unable to reply to consultancy queries. Also, we do mention that our replies are solely on a practical basis and we advise you to cross verify with professional authorities for a fact check."

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1 thought on "GST Rates and SAC Codes for Services By Travel Agents"

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.

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Understanding GST Rates and SAC Codes for Services Offered by Travel Agents

In today’s era, where traveling has become an integral part of people’s lives, be it for leisure or business, understanding the complexities of expenses related to it is crucial. One such aspect that often gets overlooked is the application of GST rates on services provided by travel agents and tour operators. The Goods and Services Tax (GST) council has introduced specific GST Alerts for various types of expenses related to travel, which travelers need to be aware of to plan their budgets effectively.

1. Introduction to Travel Agents

But let’s first understand the role of a travel agent. A travel agent acts as an intermediary between travelers and service providers such as hotels, airlines, car rentals, and tour operators. Their primary responsibility is to facilitate the travel planning process for their clients by offering consultancy services and comprehensive travel packages.

2. Comparison Between Tour Operators and Travel Agents

It’s essential to differentiate between tour operators and travel agents to grasp the nuances of GST application accurately.

3. Threshold Limit for GST Registration

Both tour operators and travel agents are required to register for GST if their turnover exceeds specific thresholds. For tour operators, the threshold is Rs. 20 lakhs, while for travel agents, it’s Rs. 10 lakhs. However, certain states have different turnover limits.

4. Determining the Place of Supply

The place of supply plays a crucial role in determining the applicability of GST Alerts. For instance, if a hotel or cruise is located in India, the place of supply would be the location of the hotel or cruise. However, if the hotel or cruise is outside India, the place of supply would be the location of the travel agent.

5. Applicable GST Rates for Travel Agents

Travel agents are required to levy 18% GST on their commissions. However, specific rules apply when the agent provides air transportation services, where GST rates differ based on whether the booking is domestic or international.

• Domestic booking: 5% of the basic fare
• International booking: 10% of the basic fare

6. GST Rate and SAC Code for Various Travel Services

Understanding the SAC codes and corresponding GST rates is essential for both travelers and travel agents to ensure compliance with GST regulations. Here’s a breakdown of some key services:

7. Conclusion

In summary, grasping the intricacies of GST rates and SAC codes for travel services is vital for agents and travelers alike. This understanding ensures compliance, transparent pricing, and smoother transactions. By mastering these codes, agents streamline operations and enhance customer satisfaction, while travelers gain clarity on taxes incurred. Ultimately, this knowledge empowers both parties to navigate the travel industry confidently and efficiently.

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Tour Operator under GST

Tour operator under gst.

“Tour operator under GST” means any person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation, sight-seeing or other similar services) by any mode of transport and includes any person engaged in the business of operating tours

Registration limit under Tour Operator under GST​

Every supplier whom aggregate turnover in financial year exceeds Rupees 20 Lakhs shall be liable to be registered under GST. The Limit is 10 Lakhs in case of special category of states.

Further threshold limit of Rs. 20 Lakhs is not applicable in following cases

• Peron making any inter-state taxable supply
• Person who makes taxable supply of goods or service or both on behalf of other taxable person whether as an agent or otherwise, such as Air Travel Agent.

Activities include in Tour operator under GST

Air travel agent, rail travel agent.

• Rent-A-CAB Service 
• Tour Package- inbound & outbound 
• Visa & Passport Assistance 
• Hotel Booking Services 
• Travel Insurance Services 
• Other Services (amusement facilities, joy rides like camel ride, elephant ride, horse ride, boat ride, jeep safari, porter services, guide services etc)

Case-1: Air Travel Agent opts to pay GST on basis fare module​

Air travel agents will raise 2 invoices..

Note: In case an air travel agent opts to pay GST on basic fare module, he is not required to pay GST on commission received from the airlines as well as service charges / booking charges / management charges from the customer / passenger. (Domestic Booking)

Case-2: Air Travel Agent opts to pay GST on Commission module

• 1st Invoice : Service fees @ 18% on invoice value to passenger. ITC is available
• 2nd Invoice : 18% on Commission receive from Airlines Company. ITC is available

Principal to Principal  billing

* Input credit at time of service has been received ** due immediately

Place of supply:, commission from passenger:.

Case 1 :  Service receiver located in India & his address is availabl e: Location of service Recipient Case 2 :  Service Receiver address not available : Location of Service Provider

Commission from Airlines:

Case 1: Location of Airlines in India : Location of Service recipient Case 2: Location of Airlines outside India : Location of service Provider

GST Return filing Service

GST rate will be 18% on service charges collected from passengers. No commission is paid by the railways, So, no other option rate is applicable in this case. 

SAC in the case of Rail Travel Agent will be 9967. 

Place of supply : Location of service Recipient

There are 2 methods of invoice:

• If the invoice  not showing margin separately then tax liability shall be  on the gross amount charged
• If invoice showing margin separately then tax liability shall be @ 18% of margin shown only (rule 33)

Rent-A-Cab Service

Commission basis gst applicable rate will be @18%, net cost & mark-up basis.

Case-1 : where the cost of fuel is included in the consideration charges: GST Applicable rate will be @5% without ITC or @12% with ITC

Case-2: where the cost of fuel is not included in the consideration charges: A Cab operator is required to pay GST@ 18% with ITC.

SAC in the case of Rent-A-CAB service is 9967.

There are 2 methods of invoicing if operator hired cab:

Gst return filing:, tour package- inbound & outbound, inbound tour package:.

Tours organized by the Tour Operator, within India for the tourist coming from outside India is known as inbound tours.

Note : If Tour operator avail any services from another Tour Operator as input service then ITC on such input services which is similar to his output can be taken. (Notification No. 1/2018- Central Tax (Rate), dated 25 th January, 2018) (5% on total value not mark-up)

• Commission basis: If the tour is on Commission basis then taxable @ 18% with ITC & place of supply shall be location of Service Provider i.e.in India
• Service fees on client basis: If hotel/ transporter issues invoice directly in the name of the client and the tour operator issues invoice only for its service fees to the client. The agent will issue an invoice on the client disclosing separately for its service charges and amount charged by the hotel/ transporter for booking. The agent can charge GST @ 18% of service charge only with ITC or GST @5% without ITC

Outbound Tour Package:

Tours organized by the Tour Operator, outside India, for the tourist going outside India is known as outbound tour.

Note : If Tour operator avail any services from another Tour Operator as input service then ITC on such input services which is similar to his output can be taken. (Notification No. 1/2018- Central Tax (Rate), dated 25 th  January, 2018) (5% on total value not mark-up)

• Commission basis:  If the tour is on Commission basis then taxable @ 18% with ITC & place of supply shall be location of Service Provider i.e.in India
• Service fees on client basis:  If hotel/ transporter issues invoice directly in the name of the client and the tour operator issues invoice only for its service fees to the client. The agent will issue an invoice on the client disclosing separately for its service charges and amount charged by the hotel/ transporter for booking. The agent can charge GST @ 18% of service charge only with ITC or GST @5% without ITC

Note : Outbound tour sold to a foreigner for visiting another foreign country & the payment received in foreign country is exempt from GST.

Visa & Passport Assistance

Visa & Passport Assistance is required to pay GST@ 18% with ITC.

VFS will issue invoice directly in the name of custom er, hence agent will charge GST only on his fees and w ill not be able to take the credit of GST charged by VFS to the client

 Hotel Booking Services

Room Rent upto Rs 7500/- per day = GST Rate@12%

Room Rent above Rs 7500/- per day = GST Rate@18%

Without ITC

Methods of invoicing

• Commission from hotels : 18% on Commission receive from hotel. ITC is available 
• Invoice raise by hotel in the name of client: The agent will issue an invoice on the client disclosing separately for its service charges and amount charged by the hotel for booking. The agent can charge GST @ 18% of service charge only with ITC or GST @5% without ITC (rule 33)
• Invoice raise by hotel not in the name of client: If the invoice raised by the hotel is not in the name of client, then tax liability shall be on the full value of amount charged for hotel booking @12%-18% with ITC or @ 5% without ITC
• Not in taxable territory: International booking not in taxable territory GST @ 0%

Place of supply:

Commission from hotel:.

• Domestic Hotel : Location of Hotel
• International Hotel : Location of Service Provider
• Location of Service Recipient is in India : Location of Service Recipient
• Location of Service Recipient is out of India : Location of Hotel

GST Return filing Services

Car hire services.

Travel agent may receive income for booking of Car hire on the following 2 methods:

• Principal basis:  If car hire service is on Principal basis i.e. the travel agent may purchase the car on hire on its own name and  raises bill to the clients, then GST @5% with no ITC (@18% with ITC) 
• Commission basis:  If the car hire service is on Commission basis then taxable @ 18% with ITC

Travel Insurance Services

Travel Insurance Agent is required to pay GST@ 18% with ITC or 5% without ITC

Other Services

Amusement facilities / joy rides like camel ride, elephant ride, horse ride, boat ride, jeep safari services attract GST@ 28% with ITC or 5% without ITC. SAC code as 9996. 

Porter services, guide services attract GST@ 18% with ITC or 5% without ITC. SAC code is 9985

DISCLAIMER : The views expressed in this article are of the author(s) personal views. The information cited in this article has been drawn from various sources. While every effort has been made to keep the information cited in this article error free, Author does not take the responsibility for any typography or clerical error which may have crept in while compiling the information provided in this article. The content of this article are for knowledge purpose only we accept no responsibility or liability for any loss or damage or any violation of laws that may cause.

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• Tours and Travels: HSN Code and GST Rate on Travel Agents Services

The Goods and Services Tax (GST) in India significantly impacts the tours and travel industry. Therefore, tour operators and travel agents must navigate distinct GST rates based on the availability of input tax credits (ITC) to ensure compliance and optimize their pricing strategies.

Scope of Taxation on Tours and Travels

GST regulations provide three operational methods for tour operators regarding ITC claims:

• Tour Operator with No ITC : Charges 5% GST on the total package but does not claim any ITC.
• Tour Operator Claiming ITC : Charges 18% GST on the total package and claims ITC, adhering to the place of supply rule.
• Pure Agent : Acts as an intermediary, charging 18% GST on invoices. The operator separately mentions and reimburses actual service expenses (e.g., travel, hotel) to the customer, with proper record maintenance.

Value of Supply for GST on Tours and Travels

Tour operators acting as pure agents can exclude the expenses incurred by the service provider from the value of their supply. Consequently, this exclusion ensures that GST is levied only on the actual service provided, leading to a more accurate tax liability calculation.

Time of Supply for GST on Tours and Travels

The time of supply varies based on the operational role of the tour operator:

• Not Acting as a Pure Agent : The operator charges and pays GST at the time of payment or invoice issuance, whichever is earlier. Moreover, the operator recognizes revenue on a payment basis.
• Acting as a Pure Agent : The operator charges GST when raising the final invoice or when receiving the commission, whichever occurs earlier.

Place of Supply for GST on Tours and Travels

The place of supply rules are crucial for ITC claims:

• Hotel Reservations : The place of supply is the hotel’s location. Thus, the operator cannot claim GST included in the invoice as ITC if not registered in that location.
• Flight Tickets : The place of supply is the flight departure location. Therefore, the operator cannot claim ITC if not registered in the departure state.

GST on Tours and Travels with HSN Code

Under Heading 9985 of the GST Tariff Act, the GST rate for tours and travel services is typically 5%, subject to specific conditions. Here’s a detailed breakdown of SAC codes and corresponding GST rates:

Availability of ITC Claims on Tours and Travels GST Rate

Charging 18% GST allows tour operators to claim ITC on various expenses, thereby enhancing their financial efficiency. Key points on ITC claims include:

• Air Travel Agents : They can claim ITC on GST paid for commission or service charges.
• Inbound Tour Fees : These fees are subject to 18% GST with ITC.
• Outsourced Services : ITC can be claimed if services are from another agent.
• Hotel Commissions : 18% GST is applicable with ITC claims.
• Other Renting Services : These are charged at 18% GST with ITC availability.

Understanding these regulations helps tour operators make informed decisions about their service pricing and tax obligations, ensuring compliance and optimal financial management.

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This article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event,  RMPS & Co.  or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update, etc if any.

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GST Rate on Travel Agents & Tour Operator Services in India

September 30, 2019

GST is an indirect tax which is levied on the supply of goods and services of different kinds. The services provided by a travel agent or travel agency are also under the GST ambit. Here, we talk about the applicability and rate of GST on travel agents and tour operator services.

A travel agent is a person or entity that offers services related to planning, scheduling (booking) and managing trips/tours to their customers. The services provided by a travel company may include booking air/rail accommodation, cab hire, accommodation, sightseeing, etc.

A tour operator, agent or planner provides services on behalf of Airline companies, hotels, taxi operators, and others and get a commission/fee for the same. GST is charged on the commission amount.

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 follows:

GST on Air Ticket Booking Services by Agents

18% GST will be levied on the commission income earned by air travel agents from airlines as well as 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/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

There is 5% GST on tour operator services or company, without the benefit of ITC. 5% GST will be paid on the gross commission/fee charged from the customer.

From GST perspective, the tour packages can be divided into the following two categories:

1. Inbound Tour – tour of India for foreigner travelers

If the inbound tour fee is charged on Principal basis, GST shall be charged at the rate of 5% without ITC.

If the inbound tour fee is charged on Commission basis, GST shall be charged at the rate of 18% with ITC.

2. Outbound tour – Tour outside India for an Indian/foreigner

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.

Recommended: GST Impact on Tourism Industry in India

GST on Travel Related Services like Visa, Passport, etc. by an Agent or Company

GST is not charged on any govt fees or consular charges paid for the particular services on behalf of the customer.

GST @18% will be levied on the Service Charge paid on travel-related services like Visa, Passport, etc.

ITC on GST paid can be claimed if the service is outsourced from another agent.

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.

GST on Rent-a-Cab Service

5% GST will be paid by a cab operator on the service charge collected from a customer on renting of a motor cab, including the cost of fuel.

No ITC is available on the GST paid.

For all other renting services, not covered above, GST will be charged @18% with ITC availability.

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Tags: GST on Tour Operator Services , GST on Travel Agents , GST Rate for Tour Operator , GST Rate on Travel Agency , Tours and Travels GST Rate

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GST Taxability On Tour Operators

Jan 7, 2019 | Uncategorized

Major Source of Income of Tour Operator & Travel Agents:

• Commission from Airlines& any mark-up amount from passengers.
• Sale Tour Packages, both inbound and outbound
• Travel Related Services like Visa, Passport etc.
• Hotel Bookings
• CAR Rental Services, Travel Insurance
• Railway Reservations
• AIR TICKET & COMMISSION FROM AIRLINES COMPANIES:
• BASICALLY AIR TRAVEL AGENTS DERIVE FOLLOWING TWO TYPE OF INCOME SO AIR TRAVEL AGENT WILL RAISE 2 INVOICES.
• Service fees @ 18% on invoice value to passenger: (1st Invoice)
• Commission/incentive earning from airlines: (2nd Invoice)

Option A: GST Rate on 18% on Commission on issue of invoice on Airlines Option B: DOMESTIC FAIR:5% of Basic Fair i.e. 0.9 % basic fair (18%*5%)

INTERNATIONAL FAIR:10% of Basic Fair i.e. 1.8 % basic fair (18% *10%)

Note: BASIC FARE means that part of the air fare on which commission is normally paid to the air travel agent by the airline.

PLACE OF SUPPLY

• Location of SERVICE RECEIVER
• Service Receiver located in India
• Service Receiver Registered under GST
• Service Receiver Not Registered under GST but his address is available on records
• Location of SERVICE PROVIDER
• In case service Receiver Not Registered and his address not available

Which Tax to be imposed – IGST/CGST/SGST?

• IN CASE OF COMMISSION FROM AIRLINES :
• If Location of Airlines in India
• If Location of Airlines outside India
• SALE OF TOUR PACKAGES (BOTH INBOUND & OUTBOUND):

INBOUND TOURS: Guided tours within India planned by tour operators for the tourist coming from abroad

OUTBOUND TOURS:Guided tours outside India planned by tour operators for Indian tourist going abroad

• INBOUND TOURS:
• IF TOUR IS ON PRINCIPAL BASIS (DIRECT SERVICES) then
• The Place of Supply shall be location of performance of service i.e. In India
• Taxable @ 5% without ITC .
• IF THE TOUR IS ON COMMISSION BASIS (SUB AGENT/INTERMEDIARY) then
• The Place of Supply shall be location of Service Provider i.e.in India
• Taxable @ 18% with ITC.
• OUTBOUND TOURS:

  THE PLACE OF SUPPLY

• IN CASE OF PRINCIPAL TO PRINCIPAL TRANSACTION SERVICE RECIPIENT IS:
• LOCATION OF SERVICE RECEIVER
• Service RecipientLocated in India & registered under GST Law
• Service RecipientLocated in India but not registered under GST law but address is available on record
• IN CASE WHERE TOUR OPERATOR RECEIVES COMMISSION FROM ANOTHER TOUR OPERATOR SITUATED OUTSIDE INDIA
• LOCATION OF SERVICE PROVIDER
• Place of Tour Operator i.e. India
• OUTBOUND TOUR SOLD TO A FOREIGNER FOR VISITING ANOTHER FOREIGN COUNTRY & THE PAYMENT RECEIVED IN CONVERTIBLE FOREIGN COUNTRY IS EXEMPT FROM GST .

III. TRAVEL RELATED SERVICES LIKE VISA, PASSPORT Etc.

• All government fees &transaction charges paid on behalf of the client are not covered under GST Liability .
• Service charges charged by the operator on the above services 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 from output tax paid on the total charges.
• COMMISSION ON HOTEL BOOKING:
• COMMISSION FROM HOTEL/CRUISE:
• Domestic Hotel -LOCATION OF HOTEL.
• international hotel-LOCATION OF SERVICE PROVIDER
• COMMISSION FROM PASSENGERS:
• Service Recipient Located in India & registered under GST Law
• Service Recipient Located in India but not registered under GST law but address is available on record
• LOCATION OF HOTEL/CRUISE
• Service Recipient Located/resident outside India
• Car Rental Service, Travel Insurance – GST 5% WITHOUT ITC
• Renting of Motor Vehicle shall be – GST 5% WITHOUT ITC or 12% with ITC .

PLACE OF SUPPLY – LOCATION SERVICE RECIPIENT provided recipient is located in India.

• GST for travel insurance is 18% but agent are required to register with IRDA as per Insurance act 1938
• RAILWAY COMMISSION:
• GST for booking for railway is 18%
• PLACE OF SUPPLY -LOCATION SERVICE RECIPIENT provided the agent is receiving service charges from customer.

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GST LEVY ON TOUR OPERATOR

Who is a tour operator is there any definition made available under the gst act.

Yes. The Notification No:11/2017 – CT – Rate – Dt: 28.06.2017 defines ” Tour Operator “as follows:  Any person engaged in the business of operating tours like planning,scheduling, organizing, arranging tours by any mode of transport.  It may include an arrangement for accommodation, sightseeing or anothersimilar service.Does Levy of GST Rate change from one Tour Operator to other operator? Yes. The classification depends upon the nature of the activity or transactions between the service provider and the service recipient. There are two types of ” Tour operators” 1. Acting as a Pure Agent 2. Tour operator service provider 1. Acting as a Pure Agent Who is a pure agent? Is there any definition made available in the GST Act? Yes. Explanation to Section 33 of CGST Rules prescribes all the following conditions to be satisfied to be a Pure agent. 1. A person who enters into a contractual agreement with the recipient of supply to incur his expenditure or cost in the course of supply of goods or services or both ; 2. He neither intends to hold nor holds any title to the goods or services or both so procured or supplied of the recipient of the supply ; 3. He does not use such goods or services so procured for his own interest; and 4. He is entitled to receive only the actual amount incurred by him and in addition for the supply provided by him on his own account. On what value GST is applicable for a Pure Agent? The value of the supply of services in case of pure agent has been defined in Section 33 of CGST Rules. The expenditure or costs incurred by a supplier as a pure agent of the recipient of the supply shall be excluded from the total value of supply if all the following conditions are satisfied: 1. He makes the payment to the third party on the authorization of such recipient. 2. Such payment made by the pure agent has been separately indicated in his invoice as reimbursement. 3. The supplies procured by the pure agent from third parties are in addition to the services he supplies on his own account. In short, The reimbursement of expenses does not form part of the value of the supply of services by a pure agent.

Example: Mr.Ram a Customs clearinghouse Agent (CHA) is engaged to handle the import of goods from outside India on behalf of Mr.Raheem. Other than his service fee of Rs.10,000/-, Mr.Ram also recovers Rs.50,000/- from Mr.Raheem, Custom duty paid to the Customs Department. Here Mr.Ram is merely acting as a pure agent in the payment of Customs duty. Therefore the value of reimbursement of Rs.50,000/- does not form part of the value of supply from Mr.Ram to Mr.Raheem. Hence, the value of supply is Rs.10,000/- and not Rs.60,000/- What rate is applicable for Pure Agent? GST Rate is 18% with Input Tax Credit ( CGST 9% and SGST 9% or IGST 18%). The GST will be levied on the value of service (excluding reimbursement of expenses). In our example, the GST will be levied on the value of Rs.10,000/- and not the entire value of Rs.60,000/-.  there any restriction in availing Input Tax Credit? No. A pure agent can avail all eligible input tax credit (both inputs and services). 2. Tour Operator service provider: How does he differs from a Pure Agent? A pure agent only facilitates the transaction and helps the travellers to identify various supplier as per their requirements. Whereas, the tour operator does the entire booking of tours and the total fees charged shall include his margin. Hence he becomes a tour operator service provider and the entire service value is leviable under GST. What rate is applicable for Tour Operator? GST Rate is 5% with a restriction on availing of Input services (CGST @2.5% and SGST @ 2.5% or IGST @5%]. Is there any condition to be fulfilled by the Tour operator? Yes. The tour operator has to fulfill all the following condition to avail composite GST Rate @ 5%.  The bill issued for the supply of this service indicates that it is inclusive of charges of accommodation and transportation required for such tour and  the amount charged in the bill is the gross amount charged for such a tour. Is there any restriction in availing Input Tax Credit? Yes. The input tax credit of both goods and services not available. However, the ITC of input service is available in the same line of business. (Eg: a tour operator service procured from another tour operator service). Whether the service provider collects CGST & SGST or IGST? Yes. It may vary depending on the place of supply.

Related Topic: GST: Guide on Reimbursement and Disbursement of Expenses

What is meant by Place of supply?

GST is a destination based tax. The goods or services or both will be taxed at the place where they are consumed and not at the origin. Place of supply under GST Act helps to define whether the transaction is intra-state or inter-state [CGST & SGST or IGST.] When the registered dealer charges CGST & SGST or IGST? The registered dealer will levy CGST and SGST on the supply of services made within the state ( Intrastate) otherwise IGST is leviable ( Interstate and   Export) How can place of supply be identified? Are any provisions available under the GST Act? Yes. Place of supply of services has been defined under section 12 and 13 of IGST Act. Section 12 explains the place of supply of services where both the location of the service provider and service recipient is in India. Section 13 explains the place of supply of services where the location of the supplier or location of the recipient is outside India. Section: 12 (9) of IGST Act – [ Where location of supplier and recipient in India ]:  In case of a registered person, the place of supply shall be the location of such person  Example: KPN travels (registered in Tamilnadu) provides passenger transportation services to Sekharan Associates located and registered in Tamilnadu. Place of supply of service shall be Tamilnadu and hence CGST & SGST shall be levied.  In case of a person other than a registered person, the place of supply shall be the place where the passenger embarks on the conveyance for a continuous journey.  Example: KPN travels (registered in Tamilnadu) provides transportation service to Educational Institution located in Pondy (Unregistered person) for all India Tour. The Tour is scheduled to start from Pondy. Place of supply is Pondy and so IGST will be levied.  Provided that where the right to passage is given for future use and the point of embarkation is not known at the time of issue of right passage, the place of supply of such service shall be determined as per section 12 (2) of IGST Act.  Example: The Tour operator arranges a pilgrimage Tour. However, the starting point of the journey has not yet finalised (Embarkation not known) at the time of issue of the ticket. In this case, The place of supply shall be determined under section: 12(2).

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The HSN CODE FOR Tour operator services is 998555

The full form of HSN Code is Harmonized System of Nomenclature. It was introduced in 1988 by the World Customs Organization (WCO). It is a 6-digit code that separates different products. India has been using HSN codes since 1986 to separate Customs and Central Excise goods. Currently, HSN codes apply to Customs and GST. Codes derived from Customs tariffs are also used for GST purposes.

The current HSN code contains 21 sections. These are divided into 99 chapters divided into 1244 sections. This program helps to make GST easier and more universally accepted. HSN codes for six-digit goods are common worldwide. Standard HSN codes apply to Customs and GST. Codes deducted from Customs tariffs are used for GST purposes. For tax purposes, the HS code is determined by subject (4 HS digits), sub-title (6 HS digits) and tax items (8 digits).

The current HSN Code 998555 relates to Tour operator services .

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