GST Rates and SAC Codes for Services By Travel Agents
- knp gst
- Feb 15, 2024
- 3 min read
Traveling is favoured by all some people like to travel domestically and others prefer to travel abroad. But before travelling, everyone used to plan their trip at their convenience, however, sometimes they ignored the other related expenses such as GST rates on services by travel agents and tour operators. It is due to that we are familiar with the GST council has initiated distinct rates for distinct sorts of expenses pertinent to travel.
The blog focuses on what are the compliance required to be followed, what is the process for travel agents and what are the major differences between tour operators and travel agents. We shall learn about the reasons for the variation in the GST rate with the SAC code that they supply before consumers.
Explanation of a Travel Agent
A travel agent organizes travel for end clients (individuals, groups, corporations) on behalf of suppliers (hotels, airlines, vehicle rentals, cruise lines, trains, travel insurance, package tours). His commitment is to ease the process of holiday planning for their consumers and to provide consultancy services and complete travel packages.
An agent can be self-employed, work for an independent travel agency, or be a member of a travel agency group. Agents usually collect a 10 to 15% commission from lodgings, transportation companies, and interests for handling trip bookings.
Comparison B/W Tour Operators and Travel Agents
Threshold limit of GST registration for Tour Operators and Travel Agents:
Every tour operator with a turnover exceeding Rs. 20 lakhs in the previous financial year should have the GST registration. The maximum turnover is Rs. 10 lakhs for distinct categories or states.
Tour Operators in states:
They should register for GST and file a GST return if their annual turnover is more than Rs 10 lakh.
The turnover limit is not applied every time. For instance, when an individual performing an interstate taxable supply, an individual as an operator or otherwise furnishes the goods or services or both levied to taxes on behalf of another taxable individual like as an air travel agency, should receive GST registration in India.
The Source of Supply Location
E.g.- When a hotel or cruise pays the agent
If the hotel or cruise is situated in India, its point of sale shall be on the location of the hotel or cruise.
The POS of an agent will signify the location of an agent if the hotel or cruise is situated outside of India.
GST Rate Applies on Travel Agents
Travel agents need to levy 18% GST on their commission but, when the agent furnsihes the air transportation services, the GST is levied under Rule 32 of the VGST Rule 2017.
Under CGST Rule 32(3), the value of the services yielded by an air travel agency in association with the booking of airline tickets will be decided at the rate of
Domestic booking:- 5% of the basic fare
International booking:- 10% off the basic fare
GST levied to Air Travel Agent:
A Commission from Airline:
Domestic Air Ticket – GST @18% on 5% of Basic Fare
International Air Ticket – GST @ 18% on 10% of Basic Fare
B Service levied from clients:
GST at the rate of 18% on Service Charge and others.
GST Rate and SAC Code on Travel Agents Services
Closure: The aforesaid explanation signifies that all the services provided to the customers via the travel agents are obligated to taxes under the GST taxation system. It is because you might plan your upcoming vacation budget, and must ensure to include the GST that your travel agent levies you for the services they furnished.
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