What is the GST on Travel Agents and Tour Operator Services in India

Travel and Tourism area holds extraordinary vital significance in the Indian economy, giving many financial and social advantages. Aside from giving business, salary, foreign exchange for the nation, the trade in the travel industry division has a financially positive effect on other related enterprises, for example, in food processing and production, administration, facilities, development and so forth. 

Virtual Office Address for GST REgistration

Also, monetary investments in the infrastructural domain, like transportation, housing, and other travel industry related facilities lead to a general advancement of economic infrastructure. The travel industry and Hospitality Industry have different fragments like Accommodation and cooking, Transportation, Attractions i.e. Amusement Park, Monuments, Nature, events along with travel and tour agencies.

According to rule 33 of CGST Rules 2017

Value of supply of the services on the off chance that the travel operator portrays as a pure agent is, the expenses or charges sustained by a provider as a pure agent of the beneficiary of supply shall not be included in the value of supply if all the accompanying conditions are fulfilled, these are:

• The supplier portrays as a pure agent of the recipient of the supply when he makes the payment to the third party on proper validation by such beneficiary
• The payment made by the pure agent on behalf of the recipient of supply has been independently indicated in the invoice generated by the pure agent to the beneficiary of service
• The provisions secured by the pure agent from the third party as a pure agent of the beneficiary of supply are in addition to the services he supplies on his own terms. 

A pure agent is a person who Goes into a legally binding concurrence with the beneficiary to portray as his pure agent to acquire use or expenses over the span of supply of merchandise or facilities or both. He Doesn't use it for his own advantage such products or administrations so acquired.

Enrollment necessities: Every provider who makes an assessable stock of merchandise/administrations and his total turnover in the financial year surpasses Twenty Lakh Rupees will be obligated to be enlisted under GST. 

Individuals making any inter-state taxable inventory: Person who makes the taxable stock of merchandise or facilities or both on behalf of another assessable individual whether as an operator or something else, for example, Air Travel Agent.

Mentioned are the major sources of income for Tour Operators and Travel Agents:

1. Profit payments from Airlines and Segment pay-out from CRS Companies.
2. Sale Tour Packages, both inbound and outbound
3. Services pertaining to travel, like Visa, Passport, etc.
4. Hotel Bookings
5. Car Rental Services 
6. Travel Insurance
7. Railway Reservations

Now, let's have a look at how GST is calculated on these items:

• An Air Travel Agent obtains his commission from the Airlines for booking of air tickets further he additionally gets salary in the form of processing fees and so on. He even gets a margin from the customer for whom he books the tickets. Since the salary is produced from both the airline industry and through the clients, there are two parties included and henceforth two separate solicitations must be issued. Hence, GST has to be paid on commission / PLB / upload- incentive / any other form of service charges from the customer. 
• GST Rate on 18% on Commission on the issue of invoice on Airlines
• 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%)
• IGST Act will be levied when an Air Travel Agent provides facilities to an individual who stays in India and the person is enrolled under the GST law; then the destination of Supply shall be the location of the service recipient.
• The tour operator gets a commission which implies that he has booked the visit on commission premise or on head premise i.e. everything on his own and has made the various bookings and afterward raises bill on the customer. In the event that the visit is on head premise, at that point the place of supply of the facilities will be the area of execution of the service, for example, in India and is taxable @ 5% without ITC. 
• The bill generated for the supply of these benefits demonstrates that it is comprehensive of charges of settlement and transportation required for such a visit and the sum charged in the bill is the gross sum charged for such a visit including the charges of convenience and transportation required for such a visit.
• In case, the visit is on commission premise, at that point the tour operator will be doing the work of an intermediate and the destination of supply will be the area of location of the service provider, for example, in India and consequently, the services become assessable and Taxable @ 18%.

Service-Related to Tourism: Passport, Visas, Etc.

• All administration expenses and consular charges paid ON BEHALF OF customer/customer is outside the domain of GST 
• Administration Charges on the above administrations ought to be liable to GST which can be collected from the end customer. 
• In the event that the services are re-appropriated from another service provider (For instance a trip specialist from Delhi needs to redistribute a Mumbai Agent to get the Visa for Dubai), GST paid on the Mumbai Agents Invoice can be asserted as ITC and just the difference can be paid to the Government. 
• GST will be applicable to @18% for this administration.

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