GST Rate and its treatment
This query is : Resolved
Jasmeen Marwah
(Querist)
15 May 2025
Hello all,
We are tour operators. We have booked few rooms outside India for our clients (who are from India, they will go outside India next month).
we are connected with a third party who will take care of our clients overseas.
can we do cost to cost billing and charge GST 18% on mark up or we should take whole tour amount and charge 5% GST.
which will be better
thanks in advance
We are tour operators. We have booked few rooms outside India for our clients (who are from India, they will go outside India next month).
we are connected with a third party who will take care of our clients overseas.
can we do cost to cost billing and charge GST 18% on mark up or we should take whole tour amount and charge 5% GST.
which will be better
thanks in advance
12 August 2025
1. Tour Operators GST Rate Basics
GST on tour operators generally falls under Tour Operator Services (HSN 9963).
GST rate on tour operator services is usually 5% (without ITC) on the gross amount charged to customers (including markup).
There is also a 12% rate with ITC option, but most tour operators use the 5% without ITC composition.
2. Booking Rooms Outside India (Overseas Hotels)
Services provided outside India are considered export of services if they meet place of supply rules.
Export of services is zero-rated under GST, i.e., no GST on the overseas hotel bookings.
You can claim input tax credit on expenses related to exports.
3. Treatment of Cost-to-Cost Billing
If you just pass on the cost of overseas hotel bookings (i.e., third party invoice) without markup, it’s an export of service — no GST on that component.
You can bill this at cost (reimbursement) separately, no GST charged on overseas hotel cost.
4. Charging GST on Markup
The markup or service fee you charge to your clients for the overall tour (including overseas components) is taxable at 5% GST without ITC as per tour operator services.
So, you should:
Bill cost of overseas hotels separately without GST (reimbursement)
Charge 5% GST on your markup/service fee portion of the invoice
5. Can you charge 18% GST on markup?
No, 18% GST is not applicable on tour operator services.
The correct rate is 5% GST (without ITC) on the entire amount charged (or at least on the service component).
18% applies to normal services, but tour operators have a concessional rate.
GST on tour operators generally falls under Tour Operator Services (HSN 9963).
GST rate on tour operator services is usually 5% (without ITC) on the gross amount charged to customers (including markup).
There is also a 12% rate with ITC option, but most tour operators use the 5% without ITC composition.
2. Booking Rooms Outside India (Overseas Hotels)
Services provided outside India are considered export of services if they meet place of supply rules.
Export of services is zero-rated under GST, i.e., no GST on the overseas hotel bookings.
You can claim input tax credit on expenses related to exports.
3. Treatment of Cost-to-Cost Billing
If you just pass on the cost of overseas hotel bookings (i.e., third party invoice) without markup, it’s an export of service — no GST on that component.
You can bill this at cost (reimbursement) separately, no GST charged on overseas hotel cost.
4. Charging GST on Markup
The markup or service fee you charge to your clients for the overall tour (including overseas components) is taxable at 5% GST without ITC as per tour operator services.
So, you should:
Bill cost of overseas hotels separately without GST (reimbursement)
Charge 5% GST on your markup/service fee portion of the invoice
5. Can you charge 18% GST on markup?
No, 18% GST is not applicable on tour operator services.
The correct rate is 5% GST (without ITC) on the entire amount charged (or at least on the service component).
18% applies to normal services, but tour operators have a concessional rate.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Query on effect of registration of property
- GST on reimbursement of expenses
- Due date for filing return for the partner in partnership subjected to Tax Audit
- Visiting card purchase
- Foriegn assets disclosure
- Number of years as per AS amortisation of Goodwill
- Additional trade name
- Equity Share Sale and Purchase
- Whether output tax is taken credit by purchaser
- Wrong CMPo8 file
- Classification of income of P Ltd company as business or profession
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Need to correct "Whether it is last installment " response in Form 26 QB
- " Income from House Property " in joint names of co-owners
- REGARDING TDS RETURN OF FORM 27Q
- Notice under e-Verification Scheme
- GST demand notice for ITC reversal against exempted supply.
- RCM ON SECURITY CHARGES FROM INDIVIDUALS
- How to get money back from delisted company
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
