GST registration for a new travel agency: the ₹20 lakh rules

You've registered the business name, opened a current account, and started taking enquiries on Instagram. Then someone in your CA's WhatsApp group mentions the GST registration limit for a travel agency, and now you're not sure if you need a GSTIN before you send your first quotation or after your first crore.

The honest answer depends on two things most new operators never check: whether your client is in another state, and whether you're selling your own package or someone else's. Get those two wrong and you'll either register too early and carry compliance you don't need, or skip registration when the law actually requires it from your very first rupee.

This post walks through both traps, gives you a five-question test to run before you register, and covers the turnover checkpoints that come after. ₹20 lakh isn't the last number you'll need to track.

The ₹20 lakh number everyone quotes, and what it actually covers

The baseline is simple enough: a service provider must register for GST once aggregate turnover crosses ₹20 lakh in a financial year (₹10 lakh in special category states), as of July 2026. "Aggregate turnover" means all taxable supplies across India under your PAN, not per state, and not per client.

But that ₹20 lakh figure is where most explainers stop. It's exactly where a travel agency's situation gets more complicated than a typical services business, because of who your clients are and how you're selling.

Myth 1: an out-of-state client doesn't force registration on its own

A common fear among new agencies is that selling a Kashmir package to a client sitting in Mumbai counts as an inter-state supply, and inter-state supply means mandatory registration, full stop. It doesn't. Not by itself.

Notification No. 10/2017-Integrated Tax specifically exempts persons making inter-state supplies of taxable services from registration, as long as aggregate turnover stays within the ₹20 lakh threshold (₹10 lakh in special category states), per the notification. That exemption applies to goods sellers differently. But for a services business (which a tour operator selling its own packages is), client location alone doesn't force early registration.

So a two-person agency in Nashik selling Ladakh and Kerala packages to clients scattered across five states, doing ₹14 lakh a year, is not required to register just because the clients are out of state. Turnover is still the trigger.

Myth 2: if you're a sub-agent, turnover doesn't matter at all

Here's the trap that catches nearly every Instagram reseller running the sub-agent model: buying seats or packages from a larger operator and selling them under their own page, earning a commission or markup.

If you're making a taxable supply on behalf of another taxable person (acting as their agent rather than selling your own package), GST registration is mandatory regardless of turnover, under Section 24(vii) of the CGST Act. The mandatory-registration list overrides the ₹20 lakh exemption entirely. Rupee one, not lakh twenty.

This is the exact model most small-agency resellers run without realising it: you post a Bali package that's really a DMC's inventory, take the booking, and pass most of the money upstream while keeping a commission. If that's structured as agency-on-behalf-of, the turnover threshold doesn't protect you.

Careful: whether you're an "agent" for Section 24(vii) purposes or an independent seller reselling a supplier's product on your own account is a contracting and invoicing question, not a vibe. Two agencies running what looks like the same Instagram page can land on opposite sides of this depending on the paperwork behind it. Get your CA to look at the actual contract, not just the business model in your head.

GST turnover: gross billings or just your commission?

This is where the arithmetic gets uncomfortable. If you invoice under the 5% no-ITC scheme, the invoice shows the gross amount (the client's hotel, transport and your margin all bundled into one number), not just your commission or markup. That inflates your "turnover" for threshold purposes well beyond what you actually earn. It's a big reason agencies cross registration and e-invoicing thresholds faster than their bank balance suggests: gross invoicing under the 5% scheme is the mechanism.

Example: Suppose you run 40 domestic trips a year at an average package value of ₹65,000, invoiced gross under the 5% scheme. That's ₹26 lakh in turnover for registration purposes, even though your real margin, after paying hotels and transport, might be closer to ₹4–5 lakh. You'd be over the ₹20 lakh line on paper long before you feel it in the bank. Whether to invoice gross or split the invoice, ideally through invoicing software built around these GST rules rather than a manual template, affects both your rate decision and how fast you hit every threshold that follows.

The five-question test before you register

Run through these in order. Each answer changes whether registration is optional or mandatory.

1. What's your trailing 12-month aggregate turnover across all states? Below ₹20 lakh (₹10 lakh special category), keep going. Above it, you register. No further questions needed.
2. Are any of your clients outside your home state? If yes, and turnover is still under the threshold, you're covered by the Notification 10/2017 exemption, as long as question 3 is a "no".
3. Are you selling your own package, or someone else's on commission as their agent? If you're structured as an agent under Section 24(vii), registration is mandatory from rupee one. This overrides everything above.
4. How much of your income is commission versus package sale? Pure commission/booking-agent income (air tickets, hotel booking fees) sits inside the same agent-registration logic as question 3. Check with your CA on how your specific commission arrangements are contracted.
5. Would voluntary registration actually help you? Even under ₹20 lakh with no agent exposure, a GSTIN lets you claim input tax credit on the 18%-with-ITC rate and issue tax invoices that many B2B and MICE clients require before they'll even release a purchase order. Weigh the compliance overhead (returns, invoicing discipline) against the doors it opens. The 5% vs 18% decision matters more once you're registered.

The turnover checkpoints that come after registration

₹20 lakh isn't the last number on this road. As your agency grows, three more checkpoints show up. B2B/MICE work in particular tends to push gross billings up fast, for the same gross-invoicing reason as above.

Turnover crossed	What triggers	Notes
₹20 lakh (₹10 lakh special category)	GST registration for services	Subject to the inter-state exemption and agent override above
₹5 crore aggregate turnover, in any FY since 2017-18	Mandatory e-invoicing on B2B invoices	Permanent once crossed, even if turnover later dips below ₹5 crore
₹10 crore AATO	30-day deadline to upload invoices to the IRP	Effective from April 1, 2025

The ₹5 crore e-invoicing line deserves a second read of that "permanent" word. It's checked against any financial year since 2017-18, not just the current one. An agency that had one blowout MICE year and crossed ₹5 crore in gross billings, then settled back to ₹3.5 crore the next year, is still required to e-invoice every B2B invoice going forward. There's no un-crossing it.

And because tour packages are routinely invoiced gross at 5%, a mid-size agency can tip past ₹5 crore in billings while its actual commission income is a fraction of that. That means the e-invoicing obligation often arrives well before the operator "feels" like a ₹5 crore business. If your growth is coming from corporate and MICE accounts, it's worth checking your trailing gross turnover against this line every quarter, not just at year-end.

One more trap on the way up: the composition scheme, which some very small operators consider to dodge registration paperwork, is widely reported by practitioners to exclude anyone making inter-state supplies of services. That would cover most tour operators the moment a single client sits outside your home state. Don't assume it's available to you without your CA confirming the current rule against your actual client spread.

Common questions

Do I need a GST number to start a travel agency?

Only once your aggregate turnover crosses ₹20 lakh (₹10 lakh in special category states), or if you're operating as an agent selling another operator's package on commission, in which case it's mandatory from your first booking, regardless of turnover.

Is turnover calculated on the gross package price or just my commission?

For registration-threshold purposes, invoices raised under the 5% no-ITC scheme count the gross package value, not your net margin. That's a major reason agencies cross ₹20 lakh, and later ₹5 crore, faster than expected.

Does selling to a client in another state force GST registration?

Not by itself, for a services business under ₹20 lakh turnover. Notification 10/2017-IGST covers that. It stops applying the moment you're acting as someone else's agent rather than selling your own package.

The short version

• GST registration for services kicks in at ₹20 lakh aggregate turnover (₹10 lakh special category states), as of July 2026.
• Selling to an out-of-state client doesn't force registration on its own, if you're selling your own package and stay under the threshold.
• If you're a sub-agent selling on behalf of another operator, registration is mandatory from rupee one under Section 24(vii). Turnover is irrelevant.
• Gross invoicing under the 5% no-ITC scheme inflates your turnover number relative to what you actually earn. Check this before assuming you're safely under any threshold.
• Cross ₹5 crore in aggregate turnover in any year since 2017-18, and B2B e-invoicing becomes mandatory, permanently, even if turnover later falls.
• Cross ₹10 crore AATO, and you have 30 days from invoice date to upload it to the IRP.
• Confirm your specific contracting structure (agent vs. own-account) and current thresholds with your CA before registering or skipping registration.