Tour Operators are one of the emerging businesses and startups in India. With the rise of technology, business models have changed. The taxation system has also become complex for them. One such complexity is GST Registration for tour operators. Thus, If you plan to start a tour operator business or already have a Tour Operator business, you must know some essential things. In this article, we will know all about GST Registration for tour operators in detail.
What is the role of a tour operator? Who is a tour operator?
Tour Operator is usually a business that provides a complete tour package. In other words, They provide accommodation, meals, sightseeing, and several other similar services.
Furthermore, tour operators take the responsibility of providing a complete holiday package both in the nation and abroad.
In simple words, A tour operator is a company that combines two or more tourism goods and then creates travel packages based on the requirements and interests of its consumers.
As a result, A company or individual that designs and/or advertises all-inclusive trips and works with suppliers to put together a package needs to get GST Registration as per eligibility. Most tour operators sell to clients directly, or through travel agents, so they might need GST Registration as per the rules. Furthermore, these businesses have become a type of e-commerce having mobile apps or a website. So in this case, they need to mandatorily obtain GST Registration and do GST Return Filing.
Two Major Business Models of Tour Operators
Tour Operator who works to provide Tour Package:
In this case, the tour operator handles the whole booking, and the total prices charged will include his profit margin. As a result, the Tour Operator becomes a service provider, receiving services from a variety of different counterparts such as airlines, hotels, local taxi businesses, cafes, and embassies granting visas.
Tour Operator who works just as a pure agent:
The tour operator just facilitates the process by assisting travelers in identifying and reserving various vendors based on their needs. So, The payment flow is direct from the real traveler to the final service provider, with the tour operator simply charging the passenger for its piece of the service.
GST Applicability on Tour Operator Business
Every tour operator who has a turnover of more than Rs. Twenty lakhs in a fiscal year shall mandatorily obtain GST Registration. Furthermore, in the case of specific categories or particular states, the turnover limit is Rs. ten Lakhs. In simple words, tour operators in states:
- Arunachal Pradesh
- Assam
- Jammu & Kashmir
- Manipur
- Meghalaya
- Mizoram
- Nagaland
- Sikkim
- Tripura
- Himachal Pradesh
- Uttarakhand
Will have to obtain GST Registration and do GST Return Filing if their annual turnover is more than ten Lakhs Rupees.
However, it is essential to note that the threshold limit of turnover doesn’t apply in some cases. For example, the person making inter-state taxable supply. To illustrate, a person who, as an operator or otherwise, provides taxable supplies of goods or services, or perhaps both, on account of another taxable person, such as an air travel agency, must get GST Registration in India.
What is SAC Codes for Travel Agents for Outward supply?
| Reservation services for accommodation, cruises, and package tours | 998552 |
| Similarly, Reservation services for convention centers, congress centers, and exhibition halls | 998553 |
| Reservation services for event tickets, cinema halls, entertainment, and recreational services, and other reservation services | 998554 |
| Reservation services for transportation | 998551 |
| Tour operator services | 998555 |
| Other travel arrangements and related services n.e.c | 998559 |
| Freight insurance services & Travel insurance services | 997136 |
| Tourist Guide Service | 998556 |
| Tourism promotion and visitor information services | 998557 |
| Services provided for a fee/commission or contract basis on wholesale trade Explanation | 996111 |
| Services provided for a fee/commission or contract basis on retail trade Explanation | 9962 |
Here, find the complete list of HSN Codes.
GST Tax rates after GST Registration for tour operators
GST Tax Rates after GST Registration for tour operators are as follows.
- Firstly, If a Tour Operator is working as an agent, it can charge 18% GST on the total commission amount only and then take reimbursements of other expenses while providing services.
- Similarly, As a Tour Operator, Taxpayer can:
- Charge 5% GST on the total value and avail zero Input Tax Credit
- However, there is another option to charge 18% GST on total value, do GST return filing, and avail of Input Tax Credit.
Moreover, If you want any other guidance relating to GST Registration, please feel free to talk to our business advisors at 8881-069-069.
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