GST on Tour Operators

[SaiKrishna Bapathu]

Dear Sir,

A company is into tour operating services. They are providing services on both principal & agent module

1. On principal module charging GST @ 5% & not claiming any ITC

2. On Agent module they are charging commission at 18% & not claiming any ITC presently

Please suggest whether:

1. Can we do both 5% & 18% module in same GSTIN?

2. As we are providing 18% also, whether is there any provision for claiming ITC on inward services? or can we claim proportionately as per turnover?

Please suggest.

[Rachit Agarwal]

There is no restriction in supply of services as

1. Principal to Principal

2. Principal to Agent

Hence you can charge both 5% and 18%.

For Services of Tour Operator to be taxable @ 5% under Serial No 23 of Notification No 11/2017 Central Tax dated 28.06.2017 as amended vide Notification No- 1/2018 Central Tax .

a. Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [,other than the input tax credit of input service in the same line of business (i.e. tour operator service procured from another tour operator)].

b. The bill issued for supply of this service indicates that it is inclusive of charges of accommodation and transportation required for such a tour and the amount charged in the bill is the gross amount charged for such a tour including the charges of accommodation and transportation required for such a tour

In an application filed before AAR under GST, West Bengal by Golden Vacations Tours and Travels [2019 (29) G.S.T.L. 542 (A.A.R. - GST)] = 2019 (9) TMI 1046 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL.

Applicant has arranged for the accommodation in Hotel. Applicant has arranged the accommodation in the hotels for his client. Accommodation service under SAC 996311 is limited to the one provided by the hotels, guest house etc. Sl. No. 7 of the Rate Notification refers to the accommodation service as classified under SAC 996311, and, therefore, leaves no room for the suppliers like the Applicant who arrange such accommodation in hotels.

Services covered under SAC 998552 include arranging reservations for accommodation services for domestic accommodation, accommodation abroad etc. The Applicant’s supply is specifically covered and, therefore, classifiable under SAC 998552. It is, therefore, taxable under Sl. No. 23(iii) of the Rate Notification, and the Applicant is eligible to claim the input tax credit as admissible under the law

[SaiKrishna Bapathu]

Thank you sir for your valuable suggestions.

[KASTURI SETHI]

Reply by Sh.Rachit Aggarwal is worth saving for future guidance.

AI Summary

Tour Operator Can Use Principal and Agent Models Under One GSTIN; ITC Eligibility Clarified by Advance Ruling A company providing tour operating services is using both a principal and agent model, charging GST at 5% and 18% respectively, without claiming Input Tax Credit (ITC). They inquired if both models can operate under the same GSTIN and if ITC can be claimed proportionately. A respondent clarified that both models can coexist under the same GSTIN, and detailed the conditions under which services are taxable at 5% and 18%, referencing specific notifications and classifications. The respondent also confirmed eligibility for ITC under certain conditions, citing a relevant case from the Authority for Advance Ruling in West Bengal.