GST and TCS for Travel Agents and Tour Operators in 2026: 5% on Packages, Air Ticket Valuation, 2% TCS on Overseas Tours and Foreign Commission

Tour operators can charge 5% GST on packages without credit or 18% with credit, and air ticket agents pay GST only on a small deemed value.

Nikunj runs a travel agency in Rajkot that sells Char Dham and Kashmir packages, Dubai and Thailand holidays, air tickets and hotel bookings. He charges 18% GST on everything, collects no TCS on foreign packages, and files his income tax under the presumptive scheme. A customer's accountant has now asked why his invoice shows 18% on a package, and the winter season, his busiest, starts next month.

Travel agencies in Saurashtra handle every kind of booking, and each kind has its own GST and income tax rule. Getting them right can cut a customer's bill and keep the agency out of trouble. Here is how it works in 2026.

Our team handles GST, TCS, books and returns for travel agencies and tour operators. Call or WhatsApp +91 82005 28355, or see the details at the end of this guide.

GST on tour packages

• 5% without credit: on the full package price, where it includes accommodation and transport, and no input tax credit is taken except on tour services bought from other operators.
• 18% with credit: an option where you buy many taxable services and want the credit.
• Foreign packages for Indians: GST applies like domestic packages when an Indian operator sells to Indian customers.
• Foreign tourists abroad: services to a foreign tourist for a tour held wholly outside India are exempt.
• Cancellation charges: retained amounts are taxable as a service.

Air tickets, hotels and pure agent costs

• Air tickets: GST at 18% can be paid on 5% of the basic fare for domestic tickets and 10% for international tickets, instead of on actual commission.
• Hotel bookings: commission or service fees from hotels or customers carry 18%.
• Pure agent costs: amounts like visa fees paid on the customer's behalf and billed at actual can stay outside your taxable value, if the conditions are met and shown separately.
• Returns: file GSTR-1 and GSTR-3B on time. See our GST return calendar.

Commission from foreign principals

• The change: the special rule that kept intermediaries' services inside India has gone, so commission from a foreign airline, hotel platform or tour company can count as an export if the other conditions are met. See GST changes from 1 November 2026.
• Exports: billed without GST under a letter of undertaking, with payment received in foreign exchange.
• Hotels abroad: services linked to a hotel outside India follow the property's location, so check each arrangement.

TCS on overseas tour packages

• Who collects: the tour operator selling an overseas tour package collects TCS from the customer.
• Rate: 2% from 1 April 2026, from the first rupee. See the 2% TCS rule.
• Your filing: deposit the TCS and file the quarterly TCS return, so it reaches the customer's tax statement.
• For customers: the TCS is a credit against their tax, not a cost. See TCS on foreign remittance.

Income tax for travel agencies

• No presumptive scheme for commission: income in the nature of commission or agency cannot be declared under the presumptive scheme. See presumptive taxation.
• Tour operators: selling packages as principal is a business, which may qualify within the limits.
• Books: agencies with commission income should keep books and, above the limits, get a tax audit.
• Customer advances: package money received in advance is the customer's until the tour; book it as an advance, not income.

Back to Nikunj. His domestic and foreign packages move to 5% GST without credit, cutting the price for customers, while his air tickets are billed on the deemed value and hotel commissions at 18%. TCS of 2% is collected on every overseas package and his quarterly TCS returns are filed. Commission from a Dubai tour company is checked for export treatment under the new rule, and because most of his income is commission, he moves from the presumptive scheme to proper books with an audit.

How we help

• GST registration, rates and invoice formats for each service
• Choosing between 5% without credit and 18% with credit
• TCS collection, deposit and quarterly returns
• Export billing and letters of undertaking for foreign commission
• Books, tax audit and income tax returns
• Replies to GST and income tax notices

Gadhia Associate has been in practice since 2007 and has handled work for over 7,000 clients, with a 5.0 Google rating from more than 100 reviews. Travel agencies and tour operators from Junagadh, Rajkot, Jamnagar, Porbandar and Dwarka come to our Junagadh office, where same-day appointments are available. Work for clients elsewhere is handled online.

Running a travel agency before the winter rush? Get your GST rates, TCS and books set right. Call or WhatsApp +91 82005 28355, or message us on WhatsApp. The first consultation is free.

Frequently asked questions

What is the GST rate on tour packages?

5% on the full package without input tax credit, or 18% with credit.

How is GST calculated on air tickets sold by travel agents?

At 18% on 5% of the basic fare for domestic tickets, or 10% for international, instead of on actual commission.

Is TCS collected on overseas tour packages?

Yes. The tour operator collects 2% from 1 April 2026, which the customer claims as credit.

Can a travel agent use the presumptive tax scheme?

Not for commission or agency income. Books are needed for such income.

Is GST charged on foreign tour packages sold to Indians?

Yes, when an Indian operator sells them to Indian customers.

Is commission from a foreign airline or hotel platform taxable under GST?

It can now qualify as an export if the conditions are met, but check each arrangement.

Position as of 4 November 2026, under the GST law and notifications in force and the Income-tax Act, 2025. Rates depend on how each booking is structured, so check before you bill.