GST on Tours and Travels: HSN Code & GST Rates

The GST on tours and travels depends on whether you claim Input Tax Credit (ITC). If you opt out of ITC, a 5% GST rate applies. However, if you claim ITC, the applicable rate is 18%.

These GST rates directly impact the pricing of tour packages. A lower GST rate (5%) keeps costs down but prevents you from claiming ITC. On the other hand, opting for 18% GST allows ITC benefits but increases the package cost. As a result, tour operators must decide based on their business model, while customers may see varying prices based on the GST structure chosen.

Scope of GST Taxation on Tours and Travels

GST applies to various travel services, including tour packages, hotel bookings, flight tickets, and transport services. The applicable GST rate depends on the nature of the service and whether Input Tax Credit is claimed.

Tour operators fall under two GST categories—5% without ITC and 18% with ITC. Travel agents facilitating bookings also attract GST on commissions earned. Airlines, hotels, and transport providers charge GST separately based on predefined slabs.

How to Determine the Value of Supply for GST on Tours and Travels?

The Value of Supply is the total amount a travel agent or tour operator charges for services, excluding GST. It is crucial in determining the correct GST for tour packages and ensuring compliance.

If you act as a pure agent, you can exclude third-party expenses such as hotel stays, flight tickets, or transportation costs from the Value of Supply. These costs must be billed separately to the customer without adding a profit margin.

Excluding these expenses ensures that GST is applied only to your service fees, preventing unnecessary tax burdens and maintaining accurate GST calculations.

When Does GST Apply to Tours and Travels? (Time of Supply)

The Time of Supply determines when you must charge GST on tour and travel services. It depends on whether you operate as a regular tour operator or a pure agent.

If you are not a pure agent, GST applies at the time of payment or invoice issuance, whichever is earlier. This means you must recognise revenue and charge GST based on when you receive payment or issue the invoice.

For pure agents, GST is charged when you raise the final invoice or receive your commission, whichever happens first. This rule applies to services like hotel bookings, air tickets, and tour packages, where a travel agent earns a commission instead of directly providing the service.

Where Does GST Apply to Tours and Travels? (Place of Supply)

The Place of Supply determines where GST is charged for travel services. It affects the applicable GST rate and ITC eligibility for businesses. For hotel bookings, the place of supply is the hotel’s location, so GST is charged based on that state. For flight tickets, it is the departure location of the flight, meaning GST is charged based on where the journey begins.

If a tour operator is not registered for GST in these states, ITC cannot be claimed on those invoices. Understanding this rule helps travel service providers manage tax liabilities and ITC claims efficiently.

GST Rates and SAC Codes for Various Tour and Travel Services

SAC codes help classify tour and travel services under GST. Using the correct SAC code and GST rate is essential for compliance and smooth tax filing. The GST rate depends on the type of service and whether ITC is claimed.

Related Read: GST on Railway Tickets

Can You Claim ITC on GST for Tours and Travels?

Tour operators can claim Input Tax Credit (ITC) only if they charge GST at 18% and use the services for business purposes. ITC allows businesses to offset the GST paid on various expenses against their tax liability.

ITC can be claimed on eligible expenses such as hotel bookings, transportation, rent, professional fees, lease lines, and other services used for business purposes. However, if a tour operator opts for the 5% GST rate, ITC cannot be claimed.

Frequently Asked Questions (FAQs)

1. Is GST applicable on air ticket booking?

Yes, GST is charged on air tickets. Economy class tickets have 5% GST, while business class tickets have 12% GST. If you book through a travel agent, 18% GST may apply to their service fee.

2. Is GST applicable to hotel accommodation during travel?

If the cost of a room is between ₹1,000 and ₹7,500 per night, the GST rate on hotel room applies at 12%. If the room price is above ₹7,500 per night, the GST rate is 18%. Extra services like food or spa may have separate GST charges.

3. Are GST exemptions available for any travel services?

Yes, certain travel services are exempt from GST. These include public transportation such as metro, buses, auto-rickshaws, and metered taxis. Government and diplomatic travel services, as well as tour guides, religious ceremonies, and sports organisations, also qualify for exemption.

4. Are there any GST benefits for international tourists visiting India?

Yes, international tourists visiting India can benefit from GST refunds on goods purchased in India. According to Section 15 of the Integrated Goods and Services Tax (IGST) Act, tourists who are not normally resident in India can claim a refund of the integrated tax paid on goods taken out of India.

5. Is GST applicable if I book travel packages for international destinations?

Yes, GST applies when booking international travel packages through an Indian tour operator. If the operator does not claim ITC, GST is 5% on the total package cost. If the operator claims ITC, GST is 18%.

6. How does GST apply if I book a tour package through an online travel agency (OTA)?

When booking through an OTA, GST is included in the package price. If the tour operator does not claim ITC, GST is 5%, while those claiming ITC charge 18% GST. Hotels and flights booked separately may have their own GST rates.

7. Are travel agents required to issue GST invoices?

Yes, travel agents must give a GST invoice that includes their GSTIN, tax amount, and service details. If they charge a service fee or commission, 18% GST applies to that fee.