GST treatment for LLP booking foreign hotels through Indian wholesaler - Export of services?

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Shariff M

Accounts

20 Points Joined October 2025

Our company is registered in India recently under GST and is engaged in tours & travel services.

Business Model:

We purchase hotel rooms located outside India (e.g.,Dubai) from an Indian wholesaler/supplier who issues invoice from India.
We then sell/arrange these hotel bookings to foreign customers (outside India), with payment received in foreign currency.

Query:

When our company invoices the foreign customer, does this qualify as export of services (zero-rated supply under LUT), since the hotel is outside India and payment is in forex?
Are there any specific notifications, circulars, or case laws clarifying this type of transaction?

We want to ensure our GST compliance is correct as we are newly registered and would require to keep complinace withoutn errors. Kindly guide on the correct GST treatment at both purchase and sale stages.

Replies (2)

Aashok Kumar Sharma

Manager - Finance & Accounts

58560 Points Joined June 2010

Stage	Treatment	Actions / Precautions
Purchase from Indian wholesaler	Likely taxed supply by wholesaler; you pay GST / IGST and claim ITC (if wholesaler’s service is taxable)	Check whether the wholesaler treats itself under “tour operator / under 5% without ITC” or standard scheme. Ensure you have a proper tax invoice and that the inward supply is eligible for ITC.
Sale / Invoice to foreign customer	Should aim to qualify as export of service (zero-rated) under IGST (i.e. 0% IGST)	Ensure all 5 export conditions are met (supplier in India, recipient outside India, place of supply outside India, payment in convertible forex/approved INR, independent parties). Use LUT. Strong contracts/documentation. Separate any domestic component.
ITC refund / utilization	You can use ITC for the inward supplies linked to the export, or claim refund (subject to rules)	Maintain audit trail, timely refunds, etc.
Risk mitigation	Ensure that your business model is more in line with a “principal to principal” supply model rather than mere intermediary role.	Engage with a GST expert to vet your contracts, invoices, and documentation.

Jayasurya B

CA Finalist

161 Points Joined July 2022

Sec 2(6) of IGST ACT 2017, Export of services means, LOS is in India, POS is in outside India and LOR is in outside India, Consideration should be received in forex or INR wherever permitted by RBI and Supplier & Receipient are not mere establishment of distinct person.
In your case, i)Since Hotels are situated outside India, POS will be outside india(Dubai).
ii)Since customers are foreigners. LOR will be outside India.
iii)Since Supplier located in India(As you mentioned Invoices issued from India, Assuming supplier located in India).
iv)Consideration recd in forex.
v)They are not mere establishment of distinct person.
Hence you can claim Zero Rated supply benefit through furnishing Letter of Credit subject to other condition for eligibilty to claim LOC.