Difference between tour operator and travel agent and GST GST payment on the services

When a person in travel and tourism industry, buys a package for accommodation and transport services from hotels under an agreement and further sells the same package to his clients at a margin, then he is known as tour operator and he is liable to pay 5% GST on the amount collected from the clients as per Notification No.112017-CTR. He is required to pay 5% GST without taking input tax credit on services he purchased.

That means he has to collect 5% GST also from the clients in addition to the amounts charged for accommodation and transport during the tour.

On the other hand , if he acts as travel agent and books hotel rooms and transport by paying actual amounts to the service providers and charges his fees for booking hotel and transport separately , then 18% GST is payable on the fee earned by him when his annual turnover of services crosses Rs 20 lakhs per annum.