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.