tour operator booking hotels outside india - is reverse charge applicable

[Richa Goyal]

We are a tour operators. We book hotels on behalf of our clients outside India. The hotel in the other country raises bills on us as tour operators and We in turn raise bills on our clients in India. Shall we be liable for GST on the invoice received from the hotel outside India for booking on behalf of our clients. Kindly guide in view of section 11 (3) of IGST act, 2017.

[Praveen Nair]

Under GST, supply of goods and/or services in the course of import into India is be deemed to be supply in the course of inter-State trade or commerce, attracting the levy of IGST. Thus, all import of services into India will be treated as deemed inter-State supplies and would be subject to GST.

The Act lays down three conditions which must all be satisfied to qualify as import of service. These conditions are:

1. The supplier of service is located outside India
2. The recipient of service is located in India.
3. The place of supply of service is in India.

The default rule for place of supply in case where either service provider or service recipient is outside India shall be the location of the service recipient.

RCM payable and Input Tax Credit allowed.

[Ganeshan Kalyani]

Please cast your view on section 13 (5) of IGST Act. in connection with this query.

[KASTURI SETHI]

I agree with Sh.Parveen Nair Ji. I add that the tour operator is covered under Section 13(8)(b) of IGST Act as he is also performing Intermediary Services. No doubt about applicability of GST under RCM. In my view, sub-section (5) is not applicable here as suggested by Sh.Ganeshan Kalyani Ji. Other experts may intervene.

[rajkumar shukla]

In my view it is not a case of section 13(5) of the IGST as it covers admissions to or organisation of events. it is also not the case of 13(4) as the recipient of service in the instant case is tour operator and not the client who stays in hotel. it thus falls under 13(8) of IGST hence taxable .RCM should apply.

[KASTURI SETHI]

Sh.Shukla Ji, Sir Thanks for clarification.

[Ganeshan Kalyani]

Thanks for the clarification.

[Richa Goyal]

Dear Experts,

I would like to draw your attention towards some of the sections of IGST Act:

According to section 2(11) of IGST Act Imports of services means the supply of any services, Where-
(i) The supplier of services is located outside India

(ii) The recipient of services is located in India

(iii) The Place of Supply is in India.

Read with section 13(4) of IGST Act:

The place of supply of services supplied directly in relation to an Immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn,guest house , club or campsite , by whatever name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including that of architects or interior decorators, shall be the place where the immovable property is located or intended to be located.

Accordingly, If I am a tour operator and booking accommodation in hotel for my customer outside the India than in that case one of the conditions mentioned under section 2(11) i.e The place of supply must be in India is not being satisfied and hence we can hold that it shall not be considered as Import of Services and No RCM leviable on such services.

Kindly guide

[KASTURI SETHI]

Here the tour operator is playing the role of 'intermediary services". He is working for and on behalf of client of Hotel. Activity is only booking hotel. Hence covered under Section 13(8) (b) only and not under Section 13(4)

[rajkumar shukla]

The issue raised is interesting.I feel that intermediary services are performed for any Principal service provider. Is it the hotelier or the client ?

[Jitesh Khushalani]

Hi Experts, considering present scenario, in case if vendor present out of India is raising the invoice for Tour in Tour operator's name, will the IGST paid on RCM basis on it be allowed as deduction . Tour operator is charging 5% GST on Tour package services.

AI Summary

Import of services: whether reverse charge applies when a tour operator books foreign hotel accommodation for Indian clients.
Whether GST reverse charge applies hinges on import-of-services criteria and the tour operator's role. If place of supply for hotel accommodation is the location of the immovable property (the foreign hotel), the transaction is not an import of services and reverse charge would not apply. Counterviews treat the tour operator as an intermediary, arguing intermediary classification brings the supply within IGST provisions attracting reverse charge. The debate excludes certain event and immovable-property provisions as inapplicable, and raises related questions on input tax credit when reverse charge is paid.