Travel agents and transportation services are subject to the Goods and Services Tax. 

The GST Council has announced the GST rate for all services and commodities. The GST Council set rates for all products and services in five separate slabs: 0%, 5%, 12%, 18%, and 28%. On June 25, 2017, the GST portal became life, and GST registration was launched. The filing of GST returns will begin in July. GST is scheduled to go into effect on July 1, 2017. As a result, all business owners must adopt GST invoice templates, classify their services under the proper HSN or SAC code, and begin charging the correct GST rate for products and services. This article discusses the GST on travel agencies as well as the GST on transportation services. 

"Learn to Calculate GST on your Aggregate Turnover "

The travel and tourism industry is critical to the Indian economy, bringing numerous socio-economic advantages. Apart from supplying jobs, revenue, and foreign cash to the country, tourism commerce has a favourable economic impact on other related industries such as food manufacturing, services, and construction. Furthermore, investments in infrastructure such as transportation, lodging, and other tourism-related services contribute to the general development of the economy's infrastructure.

Any individual engaged in the business of planning, scheduling, organising, or arranging tours (which may include arrangements for lodging, sightseeing, or other similar services) by any means of transportation, including anyone engaged in the business of operating tours is referred to as a "tour operator."

Tour Package: Current Business Models

The tour operator handles the entire booking, and the final fees charged will include his profit margin. As a result, the Tour Operator becomes a service provider, receiving services from a variety of other counterparts such as airlines, hotels, local taxi operators, restaurants, and embassies issuing visas.

The operator of Pure Agent Tours

 The tour operator only facilitates the process by assisting travellers in identifying and reserving numerous vendors that meet their needs. The payment flow is direct from the actual traveller to the final service provider, with the tour operator merely charging the tourist for its service portion.

As per rule 33 of CGST Rules, 2017 – The value of supply of services in case a travel agent acts as a Pure agent is, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely,-

i) the supplier acts as a pure agent of the recipient of the supply when he makes the payment to the third party on authorisation by such recipient;

(ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and

(iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account.

For the purposes of this rule, the expression “pure agent” means a person who

(a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both;

(b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as a pure agent of the recipient of supply;

(c) does not use for his own interest such goods or services so procured, and

(d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account.

Backend Commission Hotel and Flight Bookings- The tour operator does not charge a commission to the customer. He merely facilitates the transaction and assists travellers in identifying and booking various vendors based on their needs. The ultimate supplier, in turn, pays commission for promotion and sales generation. It is primarily used in hotel and flight reservations.
 

SAC Codes for Travel Agents for Outward supply

GST for travel agencies and transportation services is very important and vital. Do not hesitate to register your travel agency under Goods and Services Tax, to enjoy a hassle-free as well as safe procedure you can contact Online Legal India’s team of professionals who will help you out in an easy manner.