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With more people exploring domestic and international travel, the role of travel agencies has expanded—from booking flights and hotels to offering complete tour packages. But what about the tax side? If you’re running or using the services of a travel agency, understanding the GST rate for travel agency services is a must. This blog covers applicable GST rates, ITC eligibility, and key compliance rules for the travel industry in India.
Yes. Travel agencies are taxable service providers under GST. Whether you’re booking tickets, providing hotel bookings, or offering a full tour package, you must charge GST on your services.
Most travel services fall under SAC Code 9985 – Support services for transportation and SAC Code 9983 – Other professional, technical and business services.
| Service Provided by Travel Agency | GST Rate | ITC Allowed? | SAC Code |
|---|---|---|---|
| Tour packages (domestic or international) | 5% | No | 9985 |
| Commission on airline ticket booking | 18% | Yes | 9985 |
| Hotel booking on behalf of clients | 18% | Yes | 9985 |
| Travel planning/consultancy | 18% | Yes | 9983 |
| Rent-a-cab service (not owning vehicle) | 5% or 12% | Depends | 9966 |
If you offer all-inclusive packages (transport, stay, sightseeing):
This helps keep packages affordable, but limits credit recovery for the agency.
If your agency earns commission on airline bookings, hotel bookings, or ticketing, then you must charge 18% GST on the commission—not the full booking value. In such cases, you can also claim ITC on eligible business expenses.
| Scenario | ITC Eligibility |
|---|---|
| Tour package billed at 5% GST | Not allowed |
| Commission services at 18% GST | ✅ Allowed |
| Marketing, software, office rent, staff salaries | ✅ Allowed (if 18% GST billed) |
Only agencies charging 18% GST can claim ITC. Those operating under the 5% slab for tour packages cannot.
Understanding the gst rate for travel agency services is essential for tour operators and agents who want to stay compliant, price accurately, and optimize their tax liability. Whether you’re building personalized trips or just booking tickets, correct GST application ensures smooth business operations.
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BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.