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Place of Supply - Hotel Booking through Tour Opera

Posted @ March 15, 2018, 5:13 am under (GST Compliances)

Place of supply in case of Hotel Booking can be different under the following two Conditions. One can determine the correct place of supply according to the Invoicing done in this connection and as per rules given below:

Condition -1

Tour operator is acting as an intermediary and getting Commission on Hotel Booking:

In case of hotel bookings the tour operator is acting as an intermediary for the purpose of booking tours for his clients. In such case, if it is domestic hotel booking then the place of supply shall be as per the general rule i.e.

        I.            location of hotel

      II.            In case it is international hotel booking then the place of supply shall be location of Agent.


Examples of Intermediary (agency relationships) / Pure Agent Tour Operator:-

A travel agent agrees with a hotel company to sell accommodation to a traveller on behalf of the hotel for a commission. The travel agent is an agent and the hotel company is a principal. The travel agent is making a supply on behalf of the hotel by arranging the accommodation for the traveller at the hotel.

The tour operator in such case only facilitates the transaction and helps traveller to identify various suppliers as per their requirements and arrange for its booking. Payment flow goes straight away from actual traveller to end service provider and tour operator only charges for its service portion from traveller.

As per rule 33 of CGST Rules 2017 – Value of supply of services in case travel agent acts as Pure agent is, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely,-

  1.  the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorisation by such recipient;
  2. the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and
  3. the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account.

Explanation.- For the purposes of this rule, the expression “pure agent” means a person who-

a)       does not use for his own interest such goods or services so procured; and

b)       receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account.

Condition - 2


Where there is no Intermediary / agency relationship or where agents act in their own right

A travel agent purchases from a hotel company accommodation that it later sells to a third party as part of a package. When the travel agent sells the accommodation, the travel agent does so as a principal in its own right and not as an agent of the hotel company. There are two separate supplies regarding the accommodation. The first is from the hotel company to the travel agent, and the second is from the travel agent to the third party.

Tour operator receives Service Charge from the Customer or Mark up cost to Hotel Booking from the Customer. In such case, the place of supply for service where the location of Tour operator and the recipient of Service is in India shall be:

  1. Location of recipient of service if such recipient is registered person
  2. If the recipient is not registered,

a)       be the location of recipient where address on record exist

b)       location of supplier of Service in any other case

where the location of Tour operator is in India and the location of the recipient is out of India , the place of supply in this case shall be the Location where the services are actually performed.


The concessional GST rate of 5% is subject to meeting the following conditions:- 

(i) Input Tax Credit on goods and services used in supplying output services of tour operator has not been taken. 

(ii) The invoice / bill issued for supply of output service indicates that it is inclusive of charges of accommodation and transportation required for such a tour. 

This narration can be given by way of footnote in the invoice. In case any of the above conditions are not met, the benefit of concessional rate of 5% would not apply and in that event the Department may demand full 18% GST from the tour operator. 

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