GST on Travel agent and Tour Operator

The expression “tour operator” is defined in entry No. 23 of notification No. 11/2017-Central Tax (Rate) dated 28.6.2017 as under:-
“Tour operator” 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”.

Tour Package :- Here total booking is done by the tour operator and the total fees charged shall include his margin .So the Tour Operator become service provider and in turn he receives services from various other counterparts like Airline Companies, Hotel, Local Taxi Operators, Restaurants, Embassy issuing visas.
1: Commission Earned @18%
Air Travel Commission
As per rule 32(3) of CGST Rules, the value of supply of services in relation to booking of tickets for travel by air provided by an air travel agent, shall be deemed to be an amount calculated at the rate of:
1. 5%of the basic fare in the case of domestic bookings, and
2. 10%of the basic fare in the case of international bookings
For the purposes of this sub-rule, the expression “basic fare” means that part of the air fare on which commission is normally paid to the air travel agent by the airline.
GST rate would be 18% on this Commission
2: Tour Operator @ 5% (With no input credit)
3: True agent model @ 18% [ working on service fee]
4: Hotel Sales @18% As far as our understanding, for 18% gst, one can avail input credit.
One can go for GST @18%, if you want to avail input credit.
If you have hotel bookings like things while doing a travel package where amount is huge and can get GST bills too .claim it on 18% and avail input credit ,which will be better than avail 5% on total amount which can be a burden
5. GST applicable for renting of motor vehicle shall be @ 5% with no ITC or 12% with ITC.
6. Commission on Hotel Booking 5% with no ITC

5% GST will be payable on the gross amount charged by the tour operator from the customer. This GST is uniform for all services – package tours, hotel accommodation only etc
Following are conditions for 5% GST rate :
• Input Tax Credit on goods and services used in supplying output services of tour operator has not been taken.
• The invoice / bill issued for supply of output service indicates that it is inclusive of charges of accommodation and transportation required for such a tour.
• Such narration can be given by way of footnote in the invoice.

Tour operators will not claim CGST, SGST and IGST charged by hotels, transporters, airlines, restaurants, travel agents, guide, house boats, cruise ships, monument entry fees, joy rides etc. as input tax credit.

• 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.

• SAC CODE: SAC Code for tour operator is 9985.
Group 99855 – Travel arrangement, tour operator and related services
SAC Service Category Rate
998551 Reservation services for transportation 5%
998552 Reservation services for accommodation, cruises and package tours
998553 Reservation services for convention centres, congress centres and exhibition halls
998554 Reservation services for event tickets, cinema halls, entertainment and recreational services and other reservation services
998555 Tour operator services
998556 Tourist guide services
998557 Tourism promotion and visitor information services
998559 Other travel arrangement and related services n.e.c

No Input Tax Credit is Allowed to Tour Operator Service providers
Expenses included in Value of Service :
Expenditure/costs incurred by service provider in the course of providing taxable service, shall be treated as consideration for the taxable service provided/to be provided and shall be included in the value for the purpose of charging GST on the said service.
Expenses Excluded in Value of Service :
The expenditure or costs incurred as a pure agent of the recipient of service, shall be excluded from the value of the taxable service if all the following conditions are satisfied, namely:-
1. The service provider acts as a pure agent of the recipient of service when he makes payment to third party for the goods or services procured;
2. The recipient of service receives and uses the goods or services so procured by the service provider in his capacity as pure agent of the recipient of service;
3. The recipient of service is liable to make payment to the third party;
4. The recipient of service authorizes the service provider to make payment on his behalf;
5. The recipient of service knows that the goods and services for which payment has been made by the service provider shall be provided by third party.
6. The payment made by the service provider on behalf of the recipient of service has been separately indicated in the invoice issued by the service provider to the recipient of service;
7. The service provider recovers from the recipient of service only such amount as has been paid by him to the third party; and
8. The goods or services procured by the service provider from the third party as a pure agent of the recipient of service are in addition to the services he provides on his own account.
9964 Transport of passengers, with or without accompanied belongings, by –
(a) air, embarking from or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal;
(b) non-air conditioned contract carriage other than radio taxi, for transportation of passengers, excluding tourism, conducted tour, charter or hire; or
(c) stage carriage other than air-conditioned stage carriage. Explanation.-
(a) “contract carriage” has the meaning assigned to it in clause (7) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988);
(b) “stage carriage” has the meaning assigned to it in clause (40) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988) ;
(c) “radio taxi” means a taxi including a radio cab, by whatever name called, which is in two-way radio communication with a central control office and is enabled for tracking using Global Positioning System (GPS) or General Packet Radio Service (GPRS). Nil 28/06/2017
9964 Services provided to the Central Government, by way of transport of passengers with or without accompanied belongings, by air, embarking from or terminating at a regional connectivity scheme airport, against consideration in the form of viability gap funding: Provided that nothing contained in this entry shall apply on or after the expiry of a period of 1 year from the date of commencement of operations of the regional connectivity scheme airport as notified by the Ministry of Civil Aviation. Nil 28/06/2017
9964 Service of transportation of passengers, with or without accompanied belongings, by—
(a) railways in a class other than—
(i) first class; or
(ii) an air-conditioned coach;
(b) metro, monorail or tramway;
(c) inland waterways;
(d) public transport, other than predominantly for tourism purpose, in a vessel between places located in India; and
(e) metered cabs or auto rickshaws (including e-rickshaws). Nil 28/06/2017
9964 Transport of passengers by rail in first class or air conditioned coaches 5 – with ITC of input services 28/06/2017
9964 Transport of passengers, with and without accompanied belongings by
(a) air conditioned contract carriage other than motorcab;
(b) air conditioned stage carriage;
(c) radio taxi Explanation.-
(a) “contract carriage” has the meaning assigned to it in clause (7) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988);
(b) “stage carriage” has the meaning assigned to it in clause (40) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988) ;
(c) “radio taxi” means a taxi including a radio cab, by whatever name called, which is in two-way radio communication with a central control office and is enabled for tracking using Global Positioning System (GPS) or General Packet Radio Service (GPRS). 5 – No ITC 28/06/2017
9964 Transport of passengers by air in economy class 5 – with ITC of input services 28/06/2017
9964 Transport of passengers, by air, embarking from or terminating in a Regional Connectivity Scheme Airport 5 – with ITC of input services 28/06/2017
9964 Transport of passengers by air in other than economy class. 12 28/06/2017
9964 Other Passenger transport services 18 28/06/2017
9964 Transport of passengers by motorcab(motor vehicle designed to Carry passengers inserted w.e.f 13/10/2017)where the cost of fuel is included in the consideration charged from the service recipient. 5% with no ITC or 12% with ITC 28/06/2017
9964 Transport of passengers by motorcab(motor vehicle designed to Carry passengers inserted w.e.f 13/10/2017)where the cost of fuel is included in the consideration charged from the service recipient. 12 22/08/2017
996411 Local land transport services of passengers by railways, metro, monorail, bus, tramway, autos, three wheelers, scooters and other motor vehicles 18 28/06/2017 also check SAC Code 99 or 9964
996412 Taxi services including radio taxi & other similar services; 18 28/06/2017 also check SAC Code 99 or 9964
996413 Non-scheduled local bus and coach charter services 18 28/06/2017 also check SAC Code 99 or 9964
996414 Other land transportation services of passengers. 18 28/06/2017 also check SAC Code 99 or 9964
996415 Local water transport services of passengers by ferries, cruises etc 18 28/06/2017 also check SAC Code 99 or 9964
996416 Sightseeing transportation services by rail, land, water & air 18 28/06/2017 also check SAC Code 99 or 9964
996419 Other local transportation services of passengers n.e.c. 18 28/06/2017 also check SAC Code 99 or 9964
996421 Long-distance transport services of passengers through Rail network by Railways, Metro etc 18 28/06/2017 also check SAC Code 99 or 9964
996422 Long-distance transport services of passengers through Road by Bus, Car, non-scheduled long distance bus and coach services, stage carriage etc 18 28/06/2017 also check SAC Code 99 or 9964
996423 Taxi services including radio taxi & other similar services 18 28/06/2017 also check SAC Code 99 or 9964
996424 Coastal and transoceanic (overseas) water transport services of passengers by Ferries, Cruise Ships etc 18 28/06/2017 also check SAC Code 99 or 9964
996425 Domestic/International Scheduled Air transport services of passengers 18 28/06/2017 also check SAC Code 99 or 9964
996426 Domestic/international non-scheduled air transport services of Passengers 18 28/06/2017 also check SAC Code 99 or 9964
996427 Space transport services of passengers 18 28/06/2017 also check SAC Code 99 or 9964
996429 Other long-distance transportation services of passengers n.e.c. 18 28/06/2017 also check SAC Code 99 or 9964