GST on Domestic and International Tours: Detailed Guide for Travellers and Corporates

With winter holidays, Christmas breaks and New Year celebrations around the corner, travel bookings for family vacations and corporate events typically spike. Along with itineraries and budgets, one more element now significantly influences trip cost – GST on tour packages, hotels, flights and related services.

Both individual travellers and organisations sponsoring off-sites, incentive trips, conferences or dealer meets need clarity on:

• What GST rates apply to domestic and international tours
• How GST is calculated when multiple services are bundled
• When Input Tax Credit (ITC) can be claimed on corporate travel
• How place of supply rules determine whether CGST+SGST or IGST will apply
• When an overseas tour can be treated as export of services

This comprehensive guide explains the GST framework applicable to domestic and outbound travel, with a practical focus on real-life winter travel scenarios.

GST Rate Overview for Common Travel Components

Before examining package structures and place of supply, it is useful to recall the broad GST rate pattern applicable to key tourism-related services:

Indicative GST Rates

• Tour operator service

  • 5% (concessional, with restricted ITC)
  • 18% (standard rate, full ITC)

• Hotel accommodation (per room per night)

  • 5% where room tariff ≤ ₹7,500
  • 18% where room tariff > ₹7,500

• Domestic air travel

  • 5% for economy class
  • 18% for business class

• Restaurant services

  • 5% at standalone restaurants
  • 5% or 18% in hotels, depending on room tariff

Note: These are broad benchmarks. Actual tax liability must always be aligned with the notified GST rate schedule, exemptions and relevant clarifications applicable at the time of booking.

GST on Domestic Travel Packages

Domestic tour packages usually cover a bundle of services such as:

• Hotel accommodation
• Local or inter-city transport
• Meals and restaurant services
• Sightseeing, activities and events
• Ancillary logistics and coordination

Under the GST regime, each of these components has its own rate, but the manner in which the package is structured often decides the applicable tax rate.

2.1 Tour Operator Services – Definition and Tax Treatment

Section 2(119) of the CGST Act, 2017 defines “tour operator” as:

“Tour operator” means any person engaged in the business of planning, scheduling, organizing or arranging tours (which may include arrangements for accommodation, sightseeing, or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours.

This wide wording covers:

• Full-fledged package operators
• Agents arranging hotel bookings or sightseeing only
• Businesses that operate tours directly, even if they outsource some elements

Nature of Supply – Domestic Tours

Where an Indian tour operator arranges a tour within India, the supply is treated as a taxable service provided in India, regardless of whether the recipient is:

• An individual assessee booking a family vacation, or
• A corporate entity sponsoring a domestic off-site, incentive trip or conference.

Applicable GST Rates for Tour Operator Service

The following options are available for tour operator services:

In market practice, most tour operators generally opt for 5% GST to keep package prices competitive.