The Indian tourism and hospitality industry has risen as one of the main areas of development among the services sector in India. Tourism in India has vast potential taking into consideration the rich social and cultural legacy, assortment in lifestyles, territories, and spots of natural attractions spread over the nation. Tourism is additionally a possibly substantial employment generator other than being a huge source of foreign exchange inflow into the nation.

How is the tourism industry important in India?

The Indian tourism and hospitality industry is expanding like never before.

  • By 2020, the medical tourism industry is expected to reach around US$ 9 billion.
  • By 2028, tourist arrival in India from the rest of the world is expected to reach around 30.5 billion.
  • Right now, 13 thematic centers have been selected by the government under the Swadesh Darshan schemes for tourism infrastructure development.

Thus, we can see that the Indian tourism and hospitality industry is now breaking the world records of growth & expansion.

How is the air travel industry covered under GST?

In simple terms under GST, an air travel agent can be referred to a person who is involved in delivering any service which is connected with the booking of the tickets for travel by air. Here, we will have a look at the different requirements of GST registration and GST taxes for the air travel agents in full detail.

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Where does GST apply for air travel agents in India?

Broadly, air travel agents in India derive their incomes from generally the sources that are given below:

  • A processing fee or service charge for the booking of air tickets for the customer;
  • Commission income from the airlines for booking of air tickets.

Now, the GST tax applies to the above incomes of the air travel agents having GST registration separately.

Which rule applies to air travel agents having GST registration?

Rule 32 of Central Goods and Service Tax Rules, 2017 applies on the air travel agents having GST registration. According to sub-rule 3 of rule 32 of the Central Goods and Service Tax Rules, 2017–

  • The assessment of the supply of service in connection to issuing of tickets for travel via air provided by an air travel agent will be regarded to be a sum determined at the rate of 5% of the primary airfare on account of domestic air travel,
  • GST at the rate of 10% of the essential fare on account of worldwide air travel, and 10% of the entry fee for travel via air.

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How much GST rates apply to air travel tickets?

The applicable rates of GST apply on the air travel tickets are given below-

SAC Code

DESCRIPTION OF SERVICES

GST RATE

9964

Transport of travelers by air in economy class ticket

5%

9964

Transportation of travelers by air in except economy class ticket

12%

9964

Transportation of travelers, with or without their belongings,  by air, starting from or arriving at a Regional Connectivity Scheme Airport.

5%

996423

Taxi service as well as radio taxi & other similar services

18%

996425

Domestic/international scheduled air transport services of passengers

18%

996426

Domestic/international non-scheduled air transport services of passengers

18%

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