Tour operator under GST
A "tour operator under GST" is defined as an individual or entity actively involved in the business of planning, scheduling, organizing, and arranging tours. These tours may encompass services such as accommodation, sightseeing, or similar offerings, and can involve various modes of transport. The definition is inclusive, extending to those directly operating tours, and falls within the framework of Goods and Services Tax (GST), implying that businesses meeting this description are subject to relevant GST regulations, including charging GST on services, filing periodic returns, and complying with other regulatory obligations.
Registration Limit under Tour Operator under GST
- Aggregate Turnover > 20 Lakhs.
- This threshold limit will not apply if:
a) Person makes Inter-State Supply
- Under special categories of states > 10 Lakhs.
Operations within the purview of a tour operator under the GST framework
- Air-Travel Agent
- Rail Travel Agent
- Rent-A-CAB Service
- Tour Package- inbound and outbound
- Visa and Passport Assistance
- Hotel Booking Service
- Travel Insurance Services.
- Other Services (Camel Rides/Joy Rides/Horse Ride/Jeep Safari/Porter Services/Guide Service Etc)
Air Travel Agent
Case 1: Opting to pay GST on Basic Fare Model
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 ATA, shall be deemed to be an amount calculated below:
Explanation: For the purpose of this sub-rule, the expression “basic fare” means that part of fare on which commission is normally paid to the air travel agent by the Airlines.
In case ATA opts to pay GST on Basic Fare Model he is not required to pay GST on commission received from airlines as well as service charge /booking charges/management charges from customers.
(Source GST Circular Issued by IATO dated 02/08/2017)
Example:
Case 2: Opting to pay GST on Commission Model
In case he opts to pay under general rule then 18% on commission received from airlines and 18% on service charge to clients.
Place of Supply
Commission from Passenger:
Case 1: Service receiver located in India & his address is available: 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
Rail Travel Agent
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.
Place of supply: Location of service Recipient
There are 2 methods of invoice:
1. If the invoice not showing margin separately then tax liability shall be on the gross amount charged
2. 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.
Place of supply: Location of service Recipient
There are 2 methods of invoicing if operator hired cab:
1. If the invoice not showing margin separately then tax liability shall be on the gross amount charged
2. If invoice showing margin separately then tax liability shall be @ 18% of margin shown only (Rule 33)
Tour Package – Inbound and Outbound
Inbound Tour Package:
Tours organized by the Tour Operator, within India for the tourist coming from outside India is known as inbound tours.
Principal basis: If tour is on Principal basis i.e. on its own account has done the various booking and then raises bill on the client, then GST @5% with no ITC (@18% with ITC) & the place of supply shall be location of performance of service i.e. in India
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.
Principal basis: If tour is on Principal basis i.e. on its own account has done the various booking and then raises bill on the client, then GST @5% with no ITC (@18% with ITC) & the place of supply shall be location of performance of service i.e. in India.
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
Visa and Passport Assistance
Visa & Passport Assistance is required to pay GST@ 18% with ITC.
VFS will issue invoice directly in the name of customer, hence agent will charge GST only on his fees and will not be able to take the credit of GST charged by VFS to the client
Place of Supply:
Case 1: Service receiver located in India & his address is available: Location of service Recipient
Case 2: Service Receiver address not available: Location of Service Provider
Hotel Booking Services
With ITC
Room Rent up to Rs 7500/- per day = GST Rate@12%
Room Rent above Rs 7500/- per day = GST Rate@18%
Without ITC- 5%
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.
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
Commission from Passenger:
Location of Service Recipient is in India: Location of Service Recipient
Location of Service Recipient is out of India: Location of Hotel
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
Place of Supply:
Case 1: Service receiver located in India & his address is available: Location of service Recipient
Case 2: Service Receiver address not available: Location of Service Provider
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.
Porter services, guide services attract GST@ 18% with ITC or 5% without ITC.
Summary
| Description | GST Rate |
|---|---|
| Air Travel Agent | 18% on service charge and 18% on commission (18% of Basic fare if opted) |
| Rail- Travel Agent | 18% on Service Charge |
| Rent-A-CAB Service | Commission Based - 18% Net Cost Mark-up Based - If fuel cost is separated then 18% with ITC and 5% without ITC. If Fuel cost not shown separately- 18% with ITC |
| Tour Package | Principal Basis - 5% without ITC and 18% with ITC Commission Basis - 18% with ITC Service Charge Basis - 18% with ITC and 5% without ITC |
| Visa and Passport Assistance | 18% on service charge |
| Travel Insurance Services | 18% with ITC and 5% without ITC |
| Hotel Booking Services | 5% without ITC. Room Rent Basis: Up to 7500 per day- 12% with ITC Above 7500 per day- 18% with ITC Commission Basis - 18% with ITC Invoice by hotel in Client’s Name - 18% on service charge only with ITC and 5% without ITC Invoice by hotel not in Client’s Name - 12%/18% with ITC and 5% without ITC. |
| Car Hire Services |
Principal Basis - 5% without ITC and 18% with ITC Commission Basis - 18% with ITC |
| Other Services-Joy Rides | 28% with ITC and 5% without ITC |
| Other Services- Porter/Guide Services | 18% with ITC and 5% without ITC. |
Author Name : Harshitha H Halagali
Disclaimer:
“The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received, or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of particular situation.”
Prepared On:
17/10/23
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