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GST

TRAVEL & TOURISM INDUSTRY:

Tourism Industry and travel and tour agents in particular are facing a tough time due to various factors like no commission by the airlines, direct marketing of airlines, higher taxation, poor tourist infrastructure etc. Their major sources of income are listed below:

Commission from Airlines, Cruise Companies, Travel Insurance Companies etc
Sale Tour Packages, both inbound and outbound
Travel Related Services like Visa, Passport etc.
Incentives Received from CRS Companies

Now we shall deal how GST is calculated on these items.

Commission from Airlines, Cruise Companies, Travel Insurance Companies etc:

One has to understand that an airline or a cruise ticket or the travel insurance policy issued by insurance companies is a contract between the airline/cruise/insurance company and the passenger. The travel agent is only a facilitator who receives commission from the companies. Hence GST on these ticket/policy will only be consumed by the passenger and the agent cannot use them as their input credit.
However the agent has to pay GST on the commission received from the airline/cruise/insurance companies on the reverse basis. (For Example, if the GST is 18% and the agent receives Rs. 100 as commission, he has to pay only Rs.15.25 (100-100/118%) as GST). This amount of Rs. 15.25 should not be collected from the passenger.
If the agent collects Service Fee as an additional charge from the passenger and show it in the invoice separately, he can add GST on the service fee in the invoice and collect the same from the passenger.

Sale of Tour Packages, both Inbound and Outbound:

Only outbound tour sold to a foreigner for visiting another foreign country and the payment is received by convertible foreign exchange is exempt from GST. All other tours (including inbound tours for foreigners) are taxable.
GST paid on the purchase of tour packages from another tour operator can be claimed as ITC and only the difference tax can be paid to the Government.

Travel Related Services like Visa, Passport etc.

All government fees and consular charges paid on behalf of the consumer/client is outside the purview of GST
Service Charges on the above services should be subject to GST which can be collected from the end consumer.
If the services are outsourced from another service provider (For example a travel agent from Chennai has to outsource a Delhi Agent to get the Visa for Uzbekistan), GST paid on the Delhi Agents Invoice can be claimed as ITC and only the difference can be paid to the Government.

Incentives Received from the CRS Companies:

Incentives received from CRS companies attracts GST, which has to be borne by the travel agent.
Like the commission receive from the airlines, GST on this also can be paid on the Previously we did not know the exact percentage of the excise duty that we would pay. Now it is not like that. GST is an excellent thing. GST has got both Goods and Services.

– one nation one tax. All excise and other taxes have been absorbed. Certain services, at the outset, may not look like service but have been asked to consider as services.

Even the tax consultants and CAs are taking time to understand the GST. Tax consultants who are usually retired persons from the VAT dept will take longer time to understand and will rely on their practical exposure on trial and error basis. It is better initially to engage the Chartered Accountants than tax consultants. They can go through CAs or Tax Return preparers recognised by the department.