Offering EMI on tour packages: what it really costs the agent

A client wants to book a ₹2,00,000 Bali package and asks if you do EMI. You say yes, because the operator two doors down does, and losing the enquiry over a payment format feels like a silly reason to lose a booking. A finance partner sends onboarding paperwork. A few weeks later, the number in your payout account is smaller than the number you quoted.

That gap is what this post is about. Tour package EMI is not free money from a bank, and it is not free credit for your client either. Somebody funds the "no cost" in "no cost EMI," and in almost every arrangement an agent signs, that somebody is you: a subvention deducted straight out of your payout, plus exposure if the client stops paying mid-tenure or the trip cancels after the loan has disbursed.

None of that shows up in a provider's pitch. This post covers what a realistic subvention does to a package's margin, what "fast settlement" actually buys you, and the three questions to get answered in writing before an EMI badge goes on a single quote.

Who actually pays for "no cost EMI"

On a no-cost EMI, your client sees the same sticker price whether they pay upfront or spread it over three to six months. That "no cost" is not free credit gifted by the bank or NBFC. It is a discount the merchant, the agent, funds upfront, and the finance company deducts it from your payout before the money reaches you. This is how bank-issued "zero percent" EMI has always worked: the interest gets repackaged as a merchant-funded discount instead of a visible interest line to the buyer.

Travel-EMI providers pitching Indian agents lean on the growth story. As of August 2026, Sankash, the best known travel-EMI and BNPL brand marketing to Indian operators, advertises a 20% sales lift and a 40% jump in conversion from offering No Cost EMI at checkout, tenors of three and six months, next-day (T+1) settlement, and travel protection as an add-on revenue line (Sankash). What its public pages do not publish is the merchant fee, the percentage deducted from your payout. That is a commercial term, quoted deal by deal. Get yours in writing before you decide anything else.

What a realistic subvention actually does to a 10-14% margin

A tour package running at a typical 10-14% margin has little room to absorb a merchant discount meaningfully higher than the near-zero cost of a client paying upfront. Get the provider's exact quoted rate in writing: the figures below are illustrative, not a rate any provider has published.

Example: Say you sell a ₹2,00,000 outbound package at a 12% margin: ₹24,000. If the EMI provider's subvention works out to an illustrative 4% of package value (confirm your own quote), that deducts ₹8,000 before payout. Your ₹24,000 margin is now ₹16,000, a third of it gone before you have paid a single supplier.

On a domestic package priced at a thinner 6-8% margin, the same illustrative subvention can eat far more. That does not mean EMI is never worth offering. It means the decision needs the actual number in front of you, not an assumption that "no cost" means no cost to you.

T+1 settlement versus your supplier payment calendar

Fast settlement only helps your cash flow if it is genuinely faster than what you already get, and only matters if it changes when you can pay suppliers, not just when money reaches your account. A T+1 payout is a real benefit if you currently wait weeks for a client's staggered instalments to add up to a supplier-ready sum. It is a marketing line, not a benefit, if you already collect a strong upfront advance and pay hotels or DMCs on a schedule that never needed the client's money to move faster.

Map any EMI settlement timeline against how your own payment gateway actually settles funds, and against when suppliers genuinely need paying. Most outbound packages commit a large chunk of cost to a DMC, hotel block or airline group fare well before departure, regardless of how the client is paying. If EMI settlement beats both, that is a real win. If it changes neither, you are paying a subvention for a feature you are not using.

Three questions to ask before signing with any EMI provider

Before an EMI option goes on a single quote screen, get three answers in writing.

1. Is this loan legally to my client, or effectively routed through me? Some arrangements are a straightforward third-party loan to the traveller. Others make the agent carry some form of guarantee or shortfall responsibility if repayment fails.
2. Who owns recovery if the client defaults? Under India's digital lending framework, the regulated lender, the bank or NBFC actually extending credit, is meant to remain directly responsible for servicing and recovery, not the platform or agent that referred the borrower (RBI, Guidelines on Digital Lending; this 2022 circular has since been consolidated into the RBI (Digital Lending) Directions, 2025, so confirm the current clause with the provider). Ask plainly whether you are expected to chase your own client for a missed instalment.
3. What is the clawback on cancellation? If a client cancels after the loan has disbursed, does the lender want its money back from you, from the client directly, or does it net against your own refund obligation? Get this in a written clause, not a verbal "we'll sort it out."

When the client defaults mid-tenure

Your actual exposure when a client stops paying their EMI depends entirely on whether the arrangement is a genuine third-party loan or one where you have effectively guaranteed the client's payments. On a true third-party loan, you already have your money in full (minus the subvention), and the lender's recovery problem stays the lender's. If you have signed anything that makes you liable for a shortfall, a client default becomes your default too.

India's digital lending framework has generally pushed toward disbursals and repayments running directly between the borrower's own bank account and the lender's account, without routing through a pooled account held by the referring platform, alongside a mandatory cooling-off period letting a borrower exit early by repaying principal plus a proportionate interest charge (RBI, Guidelines on Digital Lending). That structure is designed to keep the agent out of the recovery chain by default. Whether your provider's contract reflects that, or quietly makes you the recovery agent, is what question two above should surface.

What happens to your money if the client cancels after disbursal

If a client cancels after the EMI loan has disbursed, two obligations land on you at once, and they do not net against each other automatically. The lender wants its disbursed amount back, per its clawback terms. Separately, you still owe the client a refund under your own cancellation policy, matched against what your suppliers actually refund you. Nobody reconciles these two flows for you.

Careful: A common trap is assuming the EMI provider "handles" the cancellation because it holds the loan. In most arrangements, the provider's only interest is getting its own principal back from you. Your obligation to the client, and the GST or TCS position on the cancelled booking, still sits entirely with you.

Work out, before you sign a single EMI client, how a mid-trip or pre-departure cancellation flows through both obligations, and which one you settle first if cash is tight.

The invoice still says full value: GST and TCS don't care how the client paid

GST and TCS apply to the full value of the tour package regardless of whether the client paid upfront, on EMI, or through any other financing arrangement. Financing changes when money moves, not what the transaction is worth for tax purposes.

Tour operator services fall under Heading 9985, with two options as of August 2026: 5% GST with no input tax credit on most underlying services (the invoice must state the amount charged is inclusive of accommodation and transportation costs), or 18% GST with full input tax credit eligibility (TaxGuru, GST on tour operator services). Either slab applies to the package's full value, not to whatever instalment hit your account that month.

Basis	Rate	Input tax credit
Package value, 5% option	5%	Generally not available, narrow exceptions
Package value, 18% option	18%	Fully available

For outbound packages, the tour-package TCS obligation sits on top, and has moved rates and thresholds more than once in recent years. As of August 2026, the reported structure (following the Budget 2025 revision) is tiered: 5% TCS up to ₹10 lakh of an overseas tour package's value in a financial year, and 20% above that, with the ₹10 lakh threshold itself raised from an earlier ₹7 lakh figure (ClearTax, TCS on overseas tour packages). The section reference and current forms have shifted with recent revisions, so confirm the current position, including which forms apply for FY 2026-27, with your CA.

Whatever slab or TCS position you invoice under, the subvention you fund to offer EMI is your own cost. It does not reduce taxable value. If a client asks why TCS shows up on their invoice, a plain-language explainer you can forward directly saves re-explaining it on every EMI-financed booking.

When EMI is worth funding and when it just gives away your margin

EMI is worth funding when the realistic alternative is a lost booking: high-ticket outbound packages where a client genuinely cannot pay the full amount upfront, and where the subvention cost is smaller than the margin you would otherwise walk away from entirely. It is a margin donation, not a growth lever, on domestic short trips where the client would have paid in full anyway.

Run the same margin math from earlier against your own package mix before switching EMI on. A high-ticket international product with a genuine affordability barrier is a very different call from a domestic weekend package where the client's card would have cleared without any financing at all.

Common questions

Is pay-later travel legit in India?

Yes, regulated banks and NBFCs do lend for travel purchases under the same RBI digital lending framework that governs other consumer credit. Legitimacy is not the risk. The risk is signing an arrangement where the agent, not just the client, ends up carrying default or cancellation exposure, which is why loan structure and clawback terms in writing matter more than the provider's brand name.

Do domestic packages like Andaman or Kashmir need EMI, or is it really for big outbound tickets?

Most domestic short-haul packages are priced low enough, and paid fast enough, that EMI adds subvention cost without solving an actual affordability problem. High-ticket outbound tickets, Dubai, Thailand or longer international itineraries running into six figures, are where a genuine payment barrier is more likely, and where funding a subvention against a booking you would otherwise lose makes sense.

Does travel EMI cost the same as a standard bank card EMI?

Not usually. Standard card-network EMI, run through a client's own bank, typically carries a lower, more standardised merchant discount than a dedicated travel-EMI or BNPL provider's subvention, which bundles in faster settlement, insurance and conversion tooling and prices that bundle accordingly. Compare both quotes in writing rather than assume they cost the same.

The short version

• No-cost EMI is not free: the subvention that keeps the client's sticker price unchanged is deducted from your own payout, not gifted by the lender.
• Run the actual quoted subvention rate against your package margin before signing. On a 10-14% margin package, a meaningful subvention can eat a third or more of it.
• T+1 or fast settlement is only a real cash-flow win if it beats your current collection timeline and your supplier payment calendar.
• Before signing any provider: get in writing whether the loan is to the client or effectively routed through you, who owns recovery on default, and what the clawback is on cancellation.
• A client cancellation after loan disbursal creates two separate obligations, lender clawback and your own refund policy, that do not net against each other automatically.
• GST (5% no-ITC or 18% with ITC) and the tour-package TCS obligation apply to the package's full value regardless of how the client financed it.
• EMI is worth funding on high-ticket outbound bookings you would otherwise lose. On domestic trips the client would have paid in full anyway, it is usually just a margin donation.