GST Rate and its treatment
This query is : Resolved
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.
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