Posted on: Nov 12, 2025 | 3 mins | Written by: HDFC ERGO Team

GST on Travel Packages: Rates, Rules and HSN Codes

gst on travel packages

The GST on tours and travels depends entirely on whether you claim the Input Tax Credit. If you are claiming ITC, the applicable GST rate will be 18%, but without ITC, the rate will be 5%. These rates have a significant impact on the price of the tour packages.

If you do not choose ITC, you will get a lower cost. However, if you pay ITC, you will get extra benefits, but it will increase the overall package cost. Therefore, for the newer models, the tour operators will have to look into the business model. The considerable difference will be applicable through GST on travel packages.

Scope of GST Taxation on Tours and Travels

The Goods and Services Tax (GST) regulations allow tour operators to operate in three different ways and claim input credits. These input tax credits in GST are known as the tax amount which businesses can subtract from the tax based on the purchase of goods and services.

The three areas for the scope of GST taxation on tours and travels include the following:

1. Tour operator with no ITC

Although the tour operator will charge 5% GST to the customer for the total package, they will not claim any ITC.

2. Tour operator claiming ITC

The tour operator charges 18% GST to the customer for the total package and will also claim ITC. However, the supply rule for the same must be considered.

3. Pure agent

The tour operator will act as an intermediary, raising an invoice that charges the customer 18%. However, their main role will be like that of a facilitator, but the actual cost for different services will be mentioned differently on the invoice. It will be taken as the reimbursement from the customer. The tour operator needs to maintain a proper record of all this information.

How to Determine the Value of Supply for GST on Tours and Travels?

The Value of Supply refers to the total amount that the tour operator or travel agent charges, exclusive of GST. This is an essential factor to consider for determining the correct GST on a tour package and determining compliance.

If the tour operator is acting as the pure agent, they can exclude various third-party expenses like transport costs, flight tickets, hotel stays and more from the Value of Supply. However, these components must be billed separately without including any profit margin. The exclusions will help to prevent tax burdens and also maintain proper GST calculations.

When Does GST Apply to Tours and Travels?

The Time of Supply for the GST on tours and travels depends on whether the tour operator is a pure agent or not. It plays a significant role in determining when one should pay GST on tour and travel services.

If the tour operator is not acting as the pure agent, the GST should be charged and paid when the invoice is issued or payment is made. However, the timeline would depend on the situation that occurs before. The tour operator will have to calculate the revenue on the payment applicable for GST purposes.

Usually, for the pure agents, the GST will be charged when the final invoice is raised or when you get your commission. It is applicable for various services, including air tickets, tour packages, and hotel bookings, when the travel agent receives a commission instead of paying for the service.

Where Does GST Apply to Tours and Travels?

GST applies to tours and travel when you make a hotel reservation. The place of supply is usually the city where the hotel or your accommodation is located. The hotel should include all information about GST in the invoice. If the particular company is not registered for GST in the place of supply, they cannot file a claim for it.

The GST for tours and travels will also apply to flight tickets, with the place of departure being the appropriate location. If the tour operator is not registered for GST in the city of departure, they can't claim GST. It is crucial to be familiar with these components for maintaining tax liabilities and filing ITC accordingly.

GST Rates and SAC Codes for Various Tour and Travel Services

According to Heading 9985 of the GST Tariff Act, 5% is the applicable GST rate for tours and travel. However, for this, specific conditions should be met, such as the following:

The tour operator offering services will not be eligible for ITC for air tickets and other services. However, the tour operator can claim ITC for services that they take from another tour operator.

The tour operator must clearly mention the information on the invoice, including the gross amount and charges for transport and accommodation.

The GST rates with HSN codes are as follows:

Description SAC GST Rate
Commission of Rail Travel Agents 9967 18%
Air Ticket Booking Services by Agents 998551 18%
Rent-a-Cab Service 9967 5%
Services provided by a tour operator to a foreign tourist in relation to a tour conducted wholly outside India. 9985 Nil
Booking of Hotel/Cruise by Agent 998552 2%–18% with ITC or 5% without
Service Charge paid on travel-related services like Visa, Passport, etc 998555 18%
Other renting services 998559 18%
Sale of Tour Packages 998552 5%

Can You Claim ITC on GST for Tours and Travels?

Yes, tour operators can claim ITC on GST on travel packages if they use them for business. ITC helps businesses offset the 18% GST paid on various expenses against their tax liability. However, it will be applicable for various costs, such as lease lines, hotel bookings, rent, transport, and others, which are used only for businesses. However, no ITC can be claimed for 5% GST.

Frequently Asked Questions (FAQs)

1. What is the HSN Code for travel and tourism?

The HSN Code for travel and tourism is 998555.

2. Is there GST on travel packages?

Yes, GST is also applicable to travel packages. Without ITC, the GST will be 5%. On the other hand, if the services are itemised, the rate will vary from 5% to 18%.

3. What is the GST on air travel?

Economy air travel GST rates remain unchanged, with 5% applicable. However, for business air travel, the GST applicable will be 18%.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.


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