Rule 32 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
An air travel agent's income is a mix of airline commission, incentives, and a service fee from the passenger. Tracking and valuing each stream on every ticket is impractical at volume.
Rule 32(3) replaces that with a deemed value — and the base is narrower than the ticket price by a wide margin.
The value of services in relation to booking of tickets for travel by air provided by an air travel agent is deemed to be 5% of the basic fare for domestic bookings and 10% of the basic fare for international bookings. The Explanation defines "basic fare" as "that part of the air fare on which commission is normally paid to the air travel agent by the airlines" — which excludes taxes, fuel surcharge, and most other components of the ticket.
What "basic fare" excludes
The definition is commission-referenced, not price-referenced. In practice, basic fare excludes:
- Government taxes — GST on the ticket, passenger service fee, user development fee, aviation security fee;
- Fuel surcharge, where the airline does not pay commission on it;
- Convenience fees charged by the booking platform;
- Baggage, seat selection, meal and other ancillary charges;
- Cancellation and change fees.
On a typical fare, basic fare can be a small fraction of the amount the passenger pays. So the deemed value at 5% of basic fare is a small fraction of a small fraction — which is why the provision is generous and why agents use it.
Worked example
A domestic ticket:
| Component | Amount |
|---|---|
| Basic fare | ₹4,000 |
| Fuel surcharge | ₹1,200 |
| Passenger service fee and other levies | ₹600 |
| GST on the ticket (charged by the airline) | ₹260 |
| Total paid by passenger | ₹6,060 |
Under Rule 32(3), the agent's deemed value is 5% of ₹4,000 = ₹200. GST at 18% on ₹200 = ₹36.
The same ticket international, with basic fare ₹40,000: deemed value 10% of ₹40,000 = ₹4,000, GST ₹720.
What the deemed value covers, and what it does not
It covers the service of booking the ticket — the agent's remuneration from the airline for making the booking, however it is structured.
It does not cover separate supplies the agent makes. In particular:
- a service fee or management fee charged to the passenger for a distinct service is arguably outside the deemed value, and many agents treat it as a separate taxable supply at 18% on the actual fee;
- visa assistance, travel insurance facilitation, hotel booking, and ground transport are separate supplies with their own valuation;
- a tour package is not a ticket booking at all — a tour operator supplying a package falls under the tour operator entry with its own rate and conditions, not Rule 32(3).
The distinction between an air travel agent and a tour operator matters and is a common classification question. An agent booking a ticket earns commission on the booking; a tour operator sells a package on its own account.
Rule 32 is optional — in form
Rule 32(1) opens: "Notwithstanding anything contained in the provisions of this Chapter, the value in respect of supplies specified below shall, at the option of the supplier, be determined in the manner provided hereinafter."
So an agent may instead value the supply under s.15 — the actual commission and incentives received.
In practice almost nobody does, for two reasons. The deemed value is usually lower, and tracking actual commission across airlines, GDS incentives, productivity-linked bonuses and segment fees is operationally hard.
But the option matters in one case: where the agent receives no commission at all and earns only a service fee from the passenger. There, Rule 32(3) would produce a deemed value on a basic fare from which the agent earned nothing, and valuing the actual service fee under s.15 is both more accurate and lower.
Practical notes
- Extract basic fare from the GDS or the airline's fare breakup, not from the ticket total. Systems that apply 5% to the gross fare significantly overstate liability.
- Domestic and international must be separated, because the percentage differs.
- Keep the classification consistent — an entity operating as both agent and tour operator needs to segregate the two revenue streams.
- Place of supply for the booking service follows s.12(2) of the IGST Act — location of the registered recipient, or the address on record. The transport service itself has its own place of supply under s.12(9).
- Cancellation charges retained by the agent are consideration for the booking facilitation service and are taxable — Circular No. 178/10/2022-GST treats them as a supply, not as damages. Liquidated damages and tolerating an act →
Key takeaways
- 5% of basic fare for domestic, 10% of basic fare for international bookings.
- "Basic fare" is the part of the fare on which the airline normally pays commission.
- Taxes, fuel surcharge, levies and ancillary charges are outside basic fare.
- The deemed value covers the booking service, not other supplies the agent makes.
- Rule 32 is optional — s.15 valuation remains available and can be better where no commission is earned.
- Air travel agent and tour operator are different classifications with different regimes.
Read next
- Rule 32(2): Valuing Foreign Exchange and Money Changing
- Valuation Rules 27 to 35 Explained
- GST on Travel and Tour Services
- GST Applicability and Compliance for Travel Agencies
Disclaimer: Positions stated as on 5 September 2026, based on the CGST Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition).