GST on Tour Operators & Travel Agents —
5% or 18%?
The correct GST rate for packaged tours, travel-agent commission, air-ticket and hotel booking fees, inbound tours for foreign tourists, ITC and the 5%-without-ITC trade-off.
A tour operator selling a packaged tour (hotel + transport + guide bundled) charges 5% GST without ITC on the gross tour amount (SAC 9985 / 998552) — the only credit allowed is ITC of input tour-operator services from another tour operator. A travel agent acting as an intermediary charges 18% on the commission / service fee, with the fare or room being the airline's or hotel's own supply. An operator may alternatively charge 18% with full ITC in specific arrangements.
GST on Travel & Tourism — Decision Table
Every common tour-operator and travel-agent scenario, with the rate, ITC position and who pays.
| Type of Supply | GST Rate | ITC | Who Pays |
|---|---|---|---|
| Packaged tour (hotel + transport bundled) | 5% | No* | Tour operator, on gross amount |
| Tour package — 18% option | 18% | Yes | Tour operator, with full ITC |
| Travel-agent commission / service fee | 18% | Yes | Agent, on fee only |
| Air-ticket booking service fee | 18% | Yes | Agent; fare is airline's supply |
| Rail / bus booking commission | 18% | Yes | Agent, on commission |
| Hotel booking as pure agent | 18% | Yes | Agent, on margin / commission |
| Inbound tour for foreign tourists | Zero-rated* | — | To the extent conditions are met |
| Pure-agent reimbursements | Excluded | — | Outside value under Rule 33 |
* 5% scheme allows only ITC of input tour-operator services from another tour operator. Rates reflect GST 2.0 (eff. 22 September 2025), which did not change the tour-operator scheme. Confirm on the official GST portal before invoicing.
The 5% Tour-Operator Scheme & the No-ITC Condition
When a tour operator packages a tour as a principal — buying hotel, transport and other services and reselling them as one product — GST is 5% on the gross tour amount (SAC 9985 / 998552). The trade-off is that Input Tax Credit is blocked: GST paid on hotel bills, transport and other inputs cannot be claimed. The one exception is ITC of input tour-operator services bought from another tour operator.
5% Packaged tour · no ITC
18% Agent commission
Choosing 5% keeps compliance simple and the client-facing price competitive, but the GST paid on hotels and transport becomes an embedded cost you build into the package. Charging 18% with full ITC can work out cheaper for B2B / corporate tours where the input GST is high and the corporate client can itself claim the credit — model both before you price.
Not sure whether 5% no-ITC or 18% with ITC is cheaper for your tours?
Get My GST Position →Tour Operator vs Travel Agent
The rate turns on whether you act as a principal or an agent. A principal (tour operator) sells its own package; an agent merely books someone else's supply and earns a fee.
Tour operator — package, no ITC
- Sells a bundled tour as principal
- 5% on the gross tour amount
- ITC on hotel & transport inputs blocked
- Bears the booking / inventory risk
- Issues one invoice for the full package
Travel agent — commission, with ITC
- Books hotel / flight for the client
- 18% on commission or service fee only
- Full ITC on own business expenses
- Fare or room is the supplier's supply
- Invoices only for the fee
Online travel agencies (OTAs) typically run both models: an 18% convenience fee when booking a flight or hotel as an intermediary, and 5% when selling their own branded holiday package as a tour operator.
Running an agency or OTA on mixed models? Get your invoicing and rates checked.
Talk to a GST Expert →Pure Agent, Air Tickets & Inbound Tours
When you book a hotel or transport as a pure agent under Rule 33, the amounts you merely pass through (the actual hotel or transport cost) are excluded from your value of supply — you charge 18% GST only on your own margin or commission.
- Air-ticket booking: the agent's commission / service fee is 18%; the fare itself is the airline's supply, taxed on the airline's invoice. See GST on air tickets.
- Rail & bus booking: the agent's commission is 18%.
- Hotel booking as pure agent: only the margin / commission is taxed at 18%; the room is the hotel's own supply.
- Inbound tours for foreign tourists may be zero-rated / exempt to the extent the conditions are met (e.g. consideration in convertible foreign exchange from a person outside India).
- Pure-agent reimbursements are excluded from value under Rule 33 — do not add GST on them again.
The single biggest error we see is mixing the principal package (5%) with agent fees (18%) on one invoice, or charging GST on pure-agent reimbursements. Separate the package value, the agent fee and the pass-through reimbursements clearly — the rate and ITC position differ for each.
Tour Operator & Travel Agent Compliance Checklist
Registration is mandatory once aggregate turnover crosses ₹20 lakh (₹10 lakh for special-category states); inter-state supplies can trigger registration regardless of turnover.
- GST registration (GSTIN)
- Correct 5% vs 18% classification
- Principal vs agent invoicing split
- Pure-agent (Rule 33) documentation
- SAC 9985 / 998552 on invoices
- ITC eligibility check (if 18%)
- Forex proof for zero-rated inbound tours
- GSTR-1 (outward supplies)
- GSTR-3B (monthly / quarterly)
- GSTR-9 annual return
- Books & records upkeep
Frequently Asked Questions
Related TaxClue Services
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