The Goods and Services Tax (GST) on tours and travel services varies based on whether input tax credit (ITC) is claimed. If ITC is not availed, a 5% GST is applied to the total tour package. However, if ITC is utilized, the applicable GST rate is 18%. These differing rates impact pricing for both travelers and tour operators.

Read on to explore the HSN code for travel services and the applicable GST rates for travel agents.

Scope of Taxation on Tours and Travels

Under GST regulations, tour operators have three different ways to operate and claim ITC. ITC allows businesses to offset the tax paid on purchases against their tax liability.

Three Taxation Methods for Tour Operators

1. Without ITC (5% GST) – Tour operators charge 5% GST on the total package cost but cannot claim ITC.
2. With ITC (18% GST) – The tour operator applies an 18% GST rate on the total package and claims ITC, considering the place of supply rules.
3. As a Pure Agent (18% GST) – The operator acts as an intermediary, applying 18% GST on its service charges while separately invoicing customers for actual expenses like hotel bookings and transport. Proper records must be maintained for reimbursements.

Value of Supply in GST for Tours and Travels

Tour operators working as pure agents can exclude reimbursed expenses from the taxable value, ensuring that GST is applied only to the service fee rather than the entire transaction amount.

Time of Supply in GST for Tours and Travels

The time of supply under GST depends on the operator’s role:

• If not acting as a pure agent: GST is charged at the time of payment or invoice issuance, whichever occurs first.
• If acting as a pure agent: GST is levied when the final invoice is raised or when the commission is received, whichever is earlier.

Place of Supply in GST for Tours and Travels

• Hotel Bookings: The place of supply is the hotel’s location, and GST is included in the invoice. ITC cannot be claimed unless the business is GST-registered in that location.
• Flight Tickets: The place of supply is the flight’s departure location. ITC is unavailable if the operator isn’t registered in that state. We provide many services like GST registration, GST refund services, GST return filing, & GST Cancellation Services. 

GST on Tours and Travels with HSN Code

According to Heading 9985 of the GST Tariff Act, the GST rate for tour and travel services is 5% if these conditions are met:

• The tour operator cannot claim ITC on hotel stays, airfare, and related services, except for services received from another tour operator.
• The invoice must clearly mention the total cost, including accommodation and transport charges.

GST Rates and SAC Codes for Travel Services

Description	SAC Code	GST Rate
Services for foreign tourists outside India	9985	Nil
Air ticket booking by agents	998551	18%
Sale of tour packages	998552	5%
Service charges for visa, passport, etc.	998555	18%
Hotel/cruise booking by agents	998552	2%-18% with ITC or 5% without
Commission on rail ticket bookings	9967	18%
Rent-a-cab service	9967	5%
Other rental services	998559	18%

ITC Claims for Tour Operators under GST

If a tour operator opts for the 18% GST rate, they can claim ITC on business expenses such as rent, professional services, telecom, and leased lines.

Detailed ITC Applicability

• Air travel agents – ITC can be claimed on GST paid for commission or service charges.
• Inbound tour operators – 18% GST applies with ITC eligibility.
• Services outsourced from another agent – ITC is available.
• Hotels charging commission – 18% GST applies, and ITC can be claimed.
• Other rental services – Taxed at 18% with ITC availability.

Understanding GST on tours and travel services helps businesses optimize tax planning while ensuring compliance.