SAC and GST rate for Travel agency issues invoice for airline ticket bookings to their clients but not as pure agent

[Dipika Shetye]

What would be the applicable SAC and gst rate on airline ticket booking invoice raised by travel agent to their clients where the client is eligible to claim ITC of invoice.

If possible, also provide background about what is prevailing market practice.

[Sadanand Bulbule]

SAC 998551

18% GST has to be charged on the Agent Service fee for bookings.

[Shilpi Jain]

Practice is the operator shows the airfare in the invoice but that is only a pass through. GST on airfare is charged by airline. Operator charges GST on this commission @ 18%.

[YAGAY andSUN]

The service provided by an air travel agent in booking airline tickets is classifiable under the Central Goods and Services Tax Act, 2017 read with the scheme of classification of services.

Classification (SAC):
The appropriate classification is SAC 998551 - Reservation services for transportation, falling under Heading 9985 (support services). The agent is not supplying air transportation per se, but facilitating booking.

Rate of Tax:
GST is leviable at 18% (9% CGST + 9% SGST or 18% IGST), with full eligibility of ITC in the hands of the recipient, subject to Section 16 conditions and absence of restriction under Section 17(5).

Valuation:
As per Rule 32(3) of the CGST Rules, a special valuation mechanism is prescribed:

• 5% of basic fare (domestic bookings)

• 10% of basic fare (international bookings)

GST is payable on such deemed value. Alternatively, where a separate service fee or commission is charged, GST @18% applies on the actual consideration.

ITC to Recipient:
Where the travel agent raises an invoice charging GST on service charges/commission under SAC 998551, the recipient is entitled to avail ITC, being a business support service not covered under blocked credits.

Prevailing Market Practice:

In B2B transactions, the established practice is that:

• The airline issues the ticket/invoice in the name of the client (with GSTIN), and

• The travel agent raises a separate invoice for service charges/commission with GST @18%.

This ensures clarity in tax treatment and seamless ITC flow. Gross billing by agents (including airfare) is generally avoided in ITC-sensitive cases due to valuation and credit complexities.

Conclusion:
The taxable supply is confined to the facilitation/booking service of the agent, classifiable under SAC 998551 and taxable at 18%, with ITC admissible to the recipient.

AI Summary

Agent reservation services attract standard GST with input tax credit available to the recipient when billed as service fee. Booking airline tickets by travel agents is a supply of reservation/facilitation services under SAC 998551 taxable at the standard GST rate; tax applies to the agent's service fee or, where applicable, to a deemed portion of the fare under valuation rules. In B2B cases the recipient may claim input tax credit on the agent's GST subject to standard ITC conditions, and market practice is separate invoicing by airline and agent to preserve clear valuation and credit flow.