5% or 18%? How to invoice a tour package correctly

Ask five tour operators what GST rate goes on a package invoice and you'll get five different answers, all delivered with total confidence. Some charge 5% on everything. Some charge 18% because "that's what my CA said last time." A few charge both, on different line items, and hope nobody asks why.

The truth is that GST on a tour package is 5% or 18% depending on one question: are you selling the trip as yourself, or are you booking it on someone else's behalf and charging a fee for the service? That single distinction, principal versus agent, decides your rate, your ITC eligibility, and how much scrutiny your invoice can survive.

This post gives you the decision tree, what changed in the September 2025 rate rejig, and four filled invoices for the situations you actually hit: a domestic package, an outbound package with a visa fee, a hotel-booking commission, and an air-ticket-only sale.

Which hat are you wearing on this booking

Every booking you make falls into one of three models, and each has its own GST treatment.

Model	What you're doing	GST rate	ITC available
Tour operator (principal)	You sell a bundled package (hotel, transport, sightseeing) at one all-in price	5% on the gross package value	No, except GST charged by another tour operator in the same line of business
Pure agent / commission	You book a single service (hotel, car, event) for a client and charge a fee or earn a commission	18% on your commission or service charge	Yes, full ITC
Air ticketing agent	You sell flight tickets and earn commission or markup	18% on commission, or the Rule 32(3) deemed-value option	Yes, if paying 18% on commission

The 56th GST Council meeting (3 September 2025, effective 22 September 2025) restructured most of the GST slabs into a two-rate system, but it left tour operator services at 5% without ITC. No change there, despite the wider rejig. The PIB release confirms the same: tour operators stay at 5% no-ITC after the rationalisation.

The confusion isn't the rate. It's which model you're actually operating under for a given booking, and most agencies run all three at once, sometimes on the same client.

What the September 2025 rejig actually changed

Nothing changed for your output rate as a tour operator. What changed is the cost sheet feeding into that 5%, and the rate on one adjacent service you may also sell.

• Hotel rooms: rooms priced ₹1,001–₹7,500 a night moved from 12% to 5% GST, still without ITC, effective 22 September 2025. Rooms above ₹7,500 a night stay at 18% with ITC. ClearTax confirms the same split.
• Flights: economy class stays at 5%. Business and premium cabins moved from 12% to 18%, and the rate that applies is locked in on the booking or payment date, not the travel date. If you ticketed a premium-cabin seat on 20 September for October travel, the old 12% still applies.

Both of these matter because they change your cost, not your output GST. If you're a tour operator charging 5% on the gross package, a cheaper hotel slab helps your margin. It doesn't change your invoice rate.

As of July 2026, these are the current rates. Rules change; confirm current rates with your CA before finalising a big-ticket quote.

What your invoice must say to justify the 5% rate

The 5% rate isn't automatic just because you call yourself a tour operator. The condition, per ClearTax's summary of the tour operator notification, is that the invoice must show the gross amount charged and state that it is inclusive of accommodation and transportation charges. You cannot itemise hotel cost, transport cost, and margin as separate lines and still claim 5% on the whole. That itemisation is what an agent's invoice looks like, and agents pay 18%.

So the safe invoice line reads something like: "Package cost for 4N/5D Himachal tour, gross amount inclusive of accommodation and transportation: ₹45,000 per person." Not a cost breakdown. One number, one description, GST at 5%.

Careful: the same package can be sold two ways: "gross inclusive of accommodation and transportation" versus an itemised hotel line + transport line + your fee. Either version can get you a different tax treatment from the same trip. Decide which hat you're wearing before you design the invoice format, not after.

The ITC exception nobody uses correctly

The 5% rate is "without ITC," but that doesn't mean zero ITC in every case. The exception applies when you buy a service from another tour operator in the same line of business: say you sub-contract part of a Kerala circuit to a local ground operator who also invoices you at 5% as a tour operator. In that case, the GST is creditable against your own 5% output liability.

What it does not cover: GST paid to hotels, car rental companies, or any supplier that isn't itself billing you as a tour operator. That input tax simply sits as a cost. Agencies that assume "I paid GST on the hotel, I should get credit" are the ones who get this wrong at assessment. The credit chain only runs operator-to-operator, not operator-to-supplier.

If you're weighing whether the 5%-no-ITC or 18%-with-ITC route actually nets you more on a given file, the arithmetic is worth doing properly rather than defaulting to whichever rate your accounting software suggests.

Four invoices, filled in

Here's what each model looks like on paper.

Example 1: Domestic package, as principal (5%, no ITC). You sell a 4N/5D Himachal package: Manali–Kasol, hotels, cab, driver, all meals. Cost to you (hotel + transport + guide): ₹32,000 per person. You sell it at ₹45,000 per person, 2 pax. Invoice: "Package cost, gross amount inclusive of accommodation and transportation: ₹90,000." GST @ 5% = ₹4,500. Total billed: ₹94,500. Most operators file this under SAC 9985. Confirm the code with your CA. No ITC claimed on the hotel or cab GST you paid as cost.

Example 2: Outbound package with a visa fee (5% on package, pure agent on visa). A Dubai package (flights, hotel, transfers, sightseeing) sold at a gross ₹1,25,000 per person, GST @ 5% = ₹6,250. The client's UAE visa fee (₹8,500, paid to the consulate/visa agency at actual cost) is invoiced separately as a reimbursement at zero markup, since visa fees can qualify for pure agent treatment if the conditions under Rule 33 are met, in which case they shouldn't attract GST on top of the government fee. Two lines, two treatments, on one invoice.

Example 3: Hotel-booking service, as agent (18%, with ITC). A corporate client asks you to just book three hotel rooms for a conference: no package, no transport, no itinerary. The hotel pays you ₹8,000 commission, or you charge the client a ₹5,000 service fee directly. Either way: GST @ 18% on that commission/fee = ₹900 (on ₹5,000). You can claim ITC on your own business expenses against this output tax, unlike the package model above.

Example 4: Air ticket only, using the Rule 32(3) option. A client wants a single economy ticket, basic fare ₹10,000. Instead of charging 18% on your commission, you use the deemed-value scheme under CGST Rule 32(3): deemed value = 5% of basic fare domestic (₹500), taxed at 18% = ₹90, effectively 0.9% of the basic fare. For an international basic fare of ₹60,000, deemed value is 10% (₹6,000), taxed at 18% = ₹1,080, or 1.8% of basic fare. ClearTax's tours and travels guide confirms the same computation. You choose this option per transaction. You're not locked in across your whole ticketing business.

Protecting your position when scrutiny comes

An assessing officer who pulls your invoices will ask one question first: does the paperwork match the rate you charged? Three habits protect you.

1. Match your contracts to your invoice model. If you're billing 5% as a principal, your client agreement should read like a package sale (one price, your liability for the whole trip), not like a booking-service agreement with itemised pass-throughs.
2. Keep your internal cost sheet separate from the client invoice. You can break down hotel cost, transport cost, and margin internally for your own P&L. The client-facing invoice for a 5% package should still show the single gross, inclusive figure.
3. Don't mix models on one invoice line. If a booking genuinely has both a bundled-package component and a pure pass-through (like the visa fee in Example 2), keep them as clearly separate lines with separate GST treatment, not blended into one number.

If a notice does arrive despite this, the response playbook walks through what to do next; and if you want the full rate list for every service you sell, not just packages, the 2026 rate card is worth pinning next to whatever GST invoicing software you use to bill packages.

Common questions

Can I charge 5% on some packages and 18% on others?

Yes. The rate follows the transaction, not the agency. The same operator can sell a bundled Himachal package at 5% and, the same week, book a standalone hotel room for a walk-in client at 18%. What you can't do is apply 5% to a booking that's structured like a commission arrangement just because 5% is lower.

Does the 5% rate apply to outbound packages too, or only domestic?

It applies to both. The tour operator rate under SAC 9985 isn't restricted to domestic tours. An outbound package sold as a bundled, gross-inclusive price qualifies the same way a domestic one does.

What if I both operate tours and sell standalone flights?

Run them as separate line items with separate GST treatment on the invoice, even if it's the same client and the same trip. A package invoice at 5% and an air-ticketing invoice using the Rule 32(3) option can sit side by side without contaminating each other's rate, as long as they're clearly separated, not bundled into one gross figure.

The short version

• Sell a bundled package as principal → 5% GST on the gross value, SAC 9985, no ITC (except GST from another tour operator in the same line of business).
• Book a single service and charge a fee or commission → 18% GST on that fee, full ITC available.
• Selling flight tickets → 18% on commission, or the Rule 32(3) deemed-value option (effectively 0.9% domestic / 1.8% international of basic fare), chosen per transaction.
• The September 2025 rejig didn't change the tour operator rate. It changed your hotel cost (12%→5% under ₹7,500/night) and premium flight GST (12%→18%).
• For the 5% rate, your invoice must show one gross figure, "inclusive of accommodation and transportation," not an itemised breakdown.
• Never blend a principal-model line and an agent-model line into one invoice figure; keep them separate even on the same trip.
• Rules change; confirm current rates and your specific classification with your CA before finalising a big invoice format.