GST on Tour Operators and Travel Agents India 2026 — Rates, ITC, Compliance

Tour operators and travel agents face some of the most complex GST rules in India. The rate depends on whether you claim ITC, whether you are a tour operator or travel agent, and the type of service. Here is the complete guide for 2026.

Tour Operator vs Travel Agent — Key Distinction

Tour Operator: Plans, organizes, and sells complete tour packages (accommodation + transport + sightseeing). Responsible for the entire experience.

Travel Agent: Acts as an intermediary — books tickets, hotels, and other services on behalf of clients. Earns commission from airlines, hotels, etc.

The GST treatment differs significantly between the two.

GST on Tour Packages — Two Options

Tour operators have two options for GST on tour packages:

Option 1: 5% GST (No ITC)

• Charge 5% GST on the total package price
• Cannot claim ITC on hotel bookings, transport, etc.
• Simpler compliance
• Better for operators with low input costs

Option 2: 18% GST (With ITC)

• Charge 18% GST on the total package price
• Can claim full ITC on all inputs (hotels, transport, meals, etc.)
• Higher rate but ITC offsets the cost
• Better for operators with high input costs

Which option is better? If your input GST (hotels, transport) is more than 13% of the package price, Option 2 (18% with ITC) results in lower net GST cost. Most tour operators with significant hotel and transport costs prefer Option 2.

Example:

• Package price: ₹1,00,000
• Hotel GST paid: ₹9,000 (18% on ₹50,000 hotel cost)
• Transport GST paid: ₹2,500 (5% on ₹50,000 transport cost)
• Total input GST: ₹11,500

Option 1: GST collected = 5% × ₹1,00,000 = ₹5,000. Net GST payable = ₹5,000 (no ITC) Option 2: GST collected = 18% × ₹1,00,000 = ₹18,000. ITC = ₹11,500. Net GST payable = ₹6,500

In this case, Option 1 is better (₹5,000 vs ₹6,500 net GST).

GST on Air Ticket Booking — Travel Agents

Travel agents booking air tickets earn commission from airlines. The GST treatment:

Deemed commission for GST:

• Domestic air tickets: 5% of basic fare
• International air tickets: 10% of basic fare

Travel agents pay GST on the deemed commission, not on the full ticket price.

GST on Hotel Booking — Travel Agents

When a travel agent books hotels for clients:

• The hotel charges GST to the travel agent (or directly to the client)
• The travel agent's commission/markup is subject to 18% GST
• If the agent charges a service fee, 18% GST applies on the fee

GST on International Tour Packages

International tour packages sold to Indian customers:

• GST rate: 5% (without ITC) or 18% (with ITC) — same as domestic
• Place of supply: India (since the recipient is in India)
• Not zero-rated: International tours are not exports of services

Exception: If an Indian tour operator provides services to a foreign tourist (non-resident), it may qualify as export of services (zero-rated). Consult a CA for specific cases.

GST on Inbound Tourism

Foreign tourists visiting India:

• Tour packages sold to foreign tourists by Indian operators: Zero-rated (export of services)
• File LUT and invoice at 0% GST
• Claim ITC refund on inputs

GST Registration for Tour Operators and Travel Agents

GST Returns for Travel Businesses

Invoicing for Tour Operators

Your invoice must clearly state:

• Whether you are charging 5% (no ITC) or 18% (with ITC)
• Description of services included in the package
• GST amount separately

Important: Once you choose 5% (no ITC) for a financial year, you cannot switch to 18% (with ITC) mid-year for the same type of service.

Common Compliance Issues

1. Not registering for GST — Once turnover exceeds ₹20L, registration is mandatory
2. Wrong rate — Charging 5% but claiming ITC (not allowed)
3. Not issuing proper invoices — Every package sale requires a GST invoice
4. Mixing tour operator and travel agent income — Different GST rules apply; keep separate records

Frequently Asked Questions

Is GST applicable on travel insurance sold by travel agents?

Travel insurance sold by travel agents is subject to 18% GST. The insurance company pays GST on the premium, and the travel agent's commission is also subject to 18% GST.

Can a small travel agent with turnover below ₹20L avoid GST registration?

Yes. If your annual turnover is below ₹20L and you do not make inter-state supplies, GST registration is not required. However, you cannot claim ITC on your inputs.

What is the GST rate on visa facilitation services?

Visa facilitation services (helping clients get visas) are treated as professional services and attract 18% GST.

Is GST applicable on travel agent commission from foreign airlines?

Commission received from foreign airlines for booking international tickets is treated as export of services (zero-rated) if the airline is outside India and payment is received in foreign exchange. File LUT and invoice at 0% GST.

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