GST is the taxation system for India applied to the goods and services supplied by any individual or any organisation. A travel agency provides all sort of tour related services that includes planning, air or rail ticket booking, hotel booking, cab hire, sightseeing, etc. They design different types of tours like solo tour, family trip, office tour, educational tour, women-only tour, trips specially designed for the aged persons and so on.
They ease the task of airline companies, hotels and resorts, cab operators and other services associated with these. Since they work on their behalf, they get a commission in return, which comes under the jurisdiction of GST law.
What Can The Tourism Sector Expect From GST?
Before the GST was introduced in India on 30th June 2016, there were multiple taxes in the tourism industry. The uniform tax rates will be able to serve you at a lower cost than earlier, which will inevitably attract foreign travellers. As a result, people associated with this large industry are expecting a surge.
However, there are several opinions and confusions all around. Some think that this has complicated the process, and the consumers will suffer from this new system. For instance, customers will have to pay 18% GST if they book a luxury hotel during the peak season as per the government guidelines.
Without a clear statement of how to determine the peak season, the hotel agents will charge more from the consumers. Still, we should hope for the best because the growth will boost up the national economy significantly.
Is India’s Tourism Sector In Trouble?
India is popular for its rich history and diverse geography, culture, religion and language. Moreover, this is the land of a plethora of a wide variety of landscapes and mesmerising architectures.
India’s serene beauty in different locations has created a great opportunity for the boom of the travel industry. The Indian tourism sector is the largest service industry and contributes as high as 6.23% to the GDP. Still, we have a long way to go to compete with world-class tourism services.
While the implications of GST for tourism are not exactly promising, there are some other factors that may contribute to any lingering signs of danger. The major hurdles that are affecting the growth of Indian tourism are:
Lack Of Infrastructure
The roads are not adequate to connect different tourist spots to the nearest city or business town, railheads and airports. Also, the road quality is poor, and they have lots of traffic.
Points Of Differentiation Are Not Addressed
Our nation is enriched with plenty of tourist attractions, but no full proof planning is there to cash upon. There are century-old religious pilgrimages, rare animal sanctuaries, tranquil spiritual institutions and spectacular places in the Himalayan range.
Lack Of Funds
Due to insufficient funds, multiple heritage places, temples, and unique architectures that need immediate renovation are going to ruin. A hefty amount is essential for travel agents for the maintenance of these priceless creations.
No Proper Planning For Marketing
Whether it is offline marketing or online, the Indian tourism sector does not have the aggressive planning to display our country as the multi-visit site.
Points That The Travel Agents Need To Know
Whenever you apply for a tax return, you need a gst no verification of the vendor before including it in your tax return sheet. The GST Identification Number (GSTIN) is a PAN-based number that you will receive while registering as a taxpayer on the official website.
Travel agents or companies are liable to pay GST based on the type of income source. You may earn a commission from two major sources. One is the airline or hotel company, and the other is the client taking their services. These two forms of income will generate different invoices.
Air Ticket Booking GST
You will be charged 18% GST on the commission earned from both the airline’s authority and the charges you collected from the customers. The incentive rate is different for domestic and international flight tickets. They type of GST is also determined by the location where you provide services.
GST For Tour Package Sale
5% GST is levied on tour operator services and the total commission earned from the clients. The tour is divided into two categories from GST perspective. Inbound tour means India tour for the foreigners and outbound tours means the tour outside India for an Indian. The GST varies depending on various scenarios.
GST On Services Like Passport, Visa Done By An Agent Or Company
No GST is charged for any government fees for any services from the customer. But for passport or visa and travel-related services, 18% GST is levied on the service charge.
GST On Hotel Or Cruise Booking By Agent
You have to follow different rules for domestic and abroad hotels. For domestic hotels, the location of the hotel determines the GST and for international hotels, the place of the service provider (i.e. the booking agent or company). You have to pay tax for the commission you earned from the passengers.
GST For Rail Travel Agents
If you are a rail travel agent, you will not get any commission from the government and hence no GST. But you will be charged 18% GST on the commission you earned from the passengers.
GST For A Cab Operator
As a cab operator, you are liable to pay 5% GST for the service charge that you claimed from the rider for hiring the cab. The service charge must include the fuel price.
GST applies to all domains, including the tourism sector. If you are a travel agency or tour operator, you may expect to reap several benefits under this new taxation system. To do that, you need to keep in mind the terms and conditions and comply with the tax regime as much as possible.
If you own a travel business, you may find tasks like preparing an invoice bill format to be a complicated process. Appoint a professional organisation like Khatabook to maintain your business ledgers and taxation services.