India’s tourism industry is one of the fastest-growing sectors, attracting both domestic and international travelers. From hotels and tour operators to travel agents and transport services, this sector is wide and varied. With the introduction of the Goods and Services Tax (GST), the taxation structure for tourism-related businesses has changed significantly.
In this blog, we’ll break down how GST applies to the tourism industry, what the tax rates are, and how it impacts both businesses and travelers.
🧳 1. GST and the Tourism Industry: Who’s Covered?
The tourism sector includes many types of service providers:
- Hotels and guest houses
- Tour operators and travel agents
- Transport providers (car rentals, cabs, buses, etc.)
- Online travel platforms (like MakeMyTrip, OYO, etc.)
- Adventure and event organizers
All of these are impacted by GST and are required to comply based on their business model and turnover.
🏨 2. GST on Hotel Accommodation
GST on hotels is linked to the room tariff (per night) and not the actual amount charged after discounts.
💼 GST Rates for Hotels (as of 2025):
| Room Tariff (per night) | GST Rate |
|---|---|
| Less than ₹1,000 | Nil (0%) |
| ₹1,001 to ₹7,500 | 12% |
| Above ₹7,500 | 18% |
✅ Note: If the hotel is part of a chain (like OYO or Treebo), GST is applicable even for lower tariffs due to aggregator policies.
✈️ 3. GST on Tour Packages and Travel Agents
📌 Tour Operators:
- If you offer composite services like transport + accommodation + guide + meals in one package, GST is levied at 5% (with no ITC on goods and limited ITC on services).
📌 Travel Agents (booking only):
- GST is charged on commission or service fees at 18%.
- For airline ticketing agents, GST is charged on basic fare portion only, not on taxes.
🚗 4. GST on Transport Services
✅ Air Travel:
- 5% GST on economy class
- 12% GST on business class
✅ Car Rentals:
- 5% GST if fuel is included (no ITC)
- 12–18% GST if fuel is excluded (with ITC)
🌐 5. Role of Online Travel Aggregators (OTAs)
Platforms like OYO, MakeMyTrip, Yatra, and Airbnb are categorized as e-commerce operators under GST.
They are responsible for:
- Collecting TCS (Tax Collected at Source) at 1%
- Ensuring all listed providers are GST registered
- Filing GSTR-8 monthly
- Issuing GST-compliant invoices
🧾 6. Input Tax Credit (ITC) in the Tourism Sector
Businesses in the tourism sector can claim ITC on:
- Services (advertising, rent, internet, consultancy, etc.)
- Office expenses (stationery, printing, electricity, etc.)
However:
- ITC is not allowed if you’re paying 5% GST (like for composite tour packages)
- ITC is also not allowed on food, beverages, and entertainment (unless part of outward supply)
⚠️ 7. Challenges in the Tourism Sector
| Challenge | Impact |
|---|---|
| Complex rate structure | Confusion for small operators |
| No ITC under composition schemes | Increases cost |
| Seasonal business with regular returns | Compliance pressure |
| Misinterpretation of bundled services | Leads to incorrect tax treatment |
| High tax on luxury hotels | May deter international tourists |
✅ 8. Best Practices for Tourism Businesses
- Always issue GST-compliant invoices
- Clearly mention tax rate and HSN/SAC codes
- Maintain records of expenses to claim eligible ITC
- Use GST software or consult professionals to file returns on time
- For composite services, ensure proper classification to avoid penalties
🧭 Conclusion
GST has brought transparency and structure to the tourism industry, but it has also added layers of compliance. Understanding GST rates, ITC eligibility, and return filing requirements is crucial for every tourism-related business — big or small.
📞 Need Help with GST for Your Tourism Business?
Whether you run a hotel, tour agency, or an online travel service — we can help you with GST registration, return filing, tax planning, and more.
📍 Taxeasy Solution
Supaul Bazar, Biraul,
Darbhanga, Bihar – 847203
📞 Mob: 6289187606
📧 Email: jhajp96@gmail.com
