For India, GST on a bundled tour package is not calculated merely because several services appear on one itinerary. First establish whether the supplier is providing a qualifying tour-operator service, a composite supply, a mixed supply, or separately billed services arranged for a commission. The CBIC rate schedule lists a conditional 5% total GST option for tour-operator services when the bill shows that accommodation and transportation are included and the amount billed is the gross tour amount including those charges. The same schedule also lists an 18% option with input tax credit (ITC). The lower rate generally restricts ITC, except for input services in the same line of business.
This is an India-focused guide based on the CBIC rate schedule and related official material available in 2026. It is not a determination of the liability on a particular itinerary, contract, or tax return. Rates, notifications, and classification should be checked against the current law and the operator’s actual documents.
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Start with the supply, not the itinerary
A hotel, flight, sightseeing excursion, transfer, cruise ticket, meal, and guide may all appear in one holiday plan. That commercial bundle does not, by itself, decide the GST treatment. The legal question is what the supplier undertakes to provide and how the transaction is structured.
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- Which business contracts with the traveler?
- Which business issues the invoice and collects the consideration?
- Is the business planning, scheduling, organizing, arranging, or operating a tour, or is it only arranging individual components?
- Are the components sold for one gross package price or billed separately?
- Is the business acting as principal for the travel product or as an agent that earns a separately stated commission?
The CBIC schedule describes a tour operator as “any person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours.” That description is broad, but the facts and documents still determine whether a particular transaction fits it.
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The two tour-operator rate options
For a qualifying tour-operator service, the CBIC rate schedule lists two relevant choices. They are not interchangeable: the output tax, invoice conditions, and ability to recover input tax differ.
| Option | Output GST | Conditions and credit treatment |
|---|---|---|
| Conditional tour-operator rate | 5% total GST | The bill must indicate that the tour price includes accommodation and transportation, and the amount billed must be the gross amount charged for the tour including those charges. ITC is generally restricted, with an exception for input services in the same line of business. |
| Alternative tour-operator rate | 18% GST | The schedule lists this rate with ITC. The operator should still confirm that the service classification and valuation support the rate. |
The Ministry of Tourism’s 2025–26 annual report summarizes the same 5% and 18% options and the invoice conditions. The figures above are therefore best treated as date-stamped Indian rate-schedule information, not a universal GST rule for every country or every travel transaction. Confirm the operative notification before filing.
When the 5% rate can be used
Both accommodation and transportation must be reflected
The cited 5% entry requires the bill to indicate inclusion of both accommodation and transportation. A package that includes only a hotel and sightseeing, or only a flight and transfers, does not satisfy the condition as stated in the schedule. Do not infer eligibility from marketing language alone; the invoice should clearly identify the included accommodation and transportation.
The taxable amount is the gross tour amount
The amount billed must be the gross amount charged for the tour, including the accommodation and transportation charges. If the operator invoices the traveler ₹100,000 as the package consideration and the 5% conditions are met, the arithmetic GST is ₹5,000 and the invoice total before any other adjustment is ₹105,000. The example assumes ₹100,000 is the tax-exclusive taxable value and does not decide whether a real package qualifies or whether another valuation rule applies.
A single invoice is not conclusive
Putting every item on one invoice is evidence of how the operator bills, but it does not automatically establish that the transaction is a tour-operator service or that the special 5% entry applies. Contracts, supplier relationships, the itinerary, and the operator’s obligations must be consistent with the invoice.
How to calculate GST step by step
- Identify the supplier and customer contract. Determine who promises the traveler the tour and who bears responsibility for supplying or arranging its elements.
- Map every component. List transport, accommodation, sightseeing, meals, tickets, guides, insurance, and any service fee. Note which entity supplies each item and whether it is included in the package price.
- Classify the arrangement. Decide whether it is a qualifying tour-operator service, a composite supply, a mixed supply, or separately supplied components with a commission or other fee.
- Test the 5% invoice conditions. Confirm that the bill identifies accommodation and transportation as included and that the billed figure is the gross tour amount including those charges.
- Choose the rate and credit model. Compare the conditional 5% option with the 18% option with ITC. Include the value of credits that are actually available to the business, not merely credits appearing on supplier invoices.
- Determine whether the quoted price is tax-exclusive or tax-inclusive. The contract and invoice should state this clearly. Apply the appropriate formula rather than adding GST to a price that already includes it.
- Calculate and document the tax. Retain the package calculation, contracts, itinerary, invoice, component invoices, and ITC workpapers so the rate choice can be explained.
Calculation formulas and worked examples
Tax-exclusive package price
When the taxable package value is stated before GST, use:
GST = taxable value × applicable rate
Invoice total = taxable value + GST
| Taxable package value | Rate | GST | Total including GST |
|---|---|---|---|
| ₹100,000 | 5% | ₹5,000 | ₹105,000 |
| ₹100,000 | 18% | ₹18,000 | ₹118,000 |
These are arithmetic illustrations. They do not establish that the 5% conditions are satisfied, that the package is valued at ₹100,000, or that the operator may claim a particular amount of ITC.
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If the customer’s total payment already includes GST, extract the tax instead of adding it again:
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GST included in a 5% price = gross price × 5 ÷ 105
GST included in an 18% price = gross price × 18 ÷ 118
For example, if ₹100,000 is a genuinely tax-inclusive price and the applicable rate is 5%, the GST component is approximately ₹4,761.90 and the underlying taxable value is approximately ₹95,238.10. At 18%, the GST component is approximately ₹15,254.24 and the underlying value is approximately ₹84,745.76. State the price basis on the invoice; otherwise the customer and operator can disagree about whether the quoted amount is consideration before or after tax.
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Discounts, deposits, and refunds
Do not silently treat a deposit, cancellation charge, discount, or supplier reimbursement as part of or outside the taxable value. The package contract should explain what the customer is paying for and how changes are handled. The material available for this guide does not establish a universal treatment for every discount, cancellation, or refund scenario, so unusual terms should be reviewed under the applicable valuation and adjustment rules.
Composite supply versus mixed supply
“Bundled” is a commercial description, not a statutory classification. Section 8 of the CGST Act provides different outcomes for composite and mixed supplies.
Composite supply
A composite supply consists of two or more taxable supplies made together in the ordinary course of business, with one principal supply. It is treated as the principal supply for GST purposes. A package in which the operator’s principal undertaking is a tour and the other elements naturally support that tour may require this analysis, but the label cannot be assumed from an itinerary alone.
Mixed supply
A mixed supply consists of two or more supplies for a single price and is treated as the supply attracting the highest applicable rate among its components. If the facts show a mixed supply rather than a composite one, applying a low rate to the entire price merely because the customer paid one amount can understate GST.
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The tour-operator rate entry has its own definition, invoice wording, gross-amount condition, and ITC treatment. Therefore, an operator should test those requirements directly and separately consider whether the transaction also meets the statutory concept of composite or mixed supply. One classification should not be substituted for another simply because it produces a more favorable rate.
Is GST charged on the full package or only the commission?
The answer depends on who supplies what and how the consideration is invoiced.
Operator sells a package for one gross amount
Where the operator contracts with the traveler for the tour and bills a package amount that includes accommodation and transportation, the conditional 5% entry is designed around the gross tour amount, provided its requirements are met. The output-tax calculation is then made on the relevant gross taxable value, not just on an internally calculated margin.
Agent bills components separately and charges a commission
A different model exists where travel, accommodation, cruise tickets, or other components are billed separately and the intermediary charges a separately stated commission for arranging them. A 2019 GST Council meeting document described that model as attracting 18% GST on the commission. That document is historical official discussion, not an independent current legal opinion. Before using it for a present-day return, verify the operative notification, statutory provisions, contracts, and invoices that govern the actual arrangement.
Do not apply a commission-only calculation merely because the operator’s internal profit is a percentage of the package price. The invoice, agency agreement, and responsibility for the traveler’s booking are more important than the operator’s accounting margin.
Comparing 5% and 18% after ITC
The 5% option can produce a lower amount on the customer’s invoice, but the rate alone does not show the operator’s effective tax cost. Under the schedule, the 5% option generally restricts ITC, while the 18% option is listed with ITC.
| Question | 5% conditional option | 18% option |
|---|---|---|
| Output tax on ₹100,000 taxable value | ₹5,000 | ₹18,000 |
| Invoice eligibility test | Accommodation and transportation must be indicated as included; gross tour amount must be billed | Confirm classification and valuation under the applicable entry |
| ITC | Generally restricted, except for input services in the same line of business as stated in the schedule | Listed with ITC, subject to the normal eligibility conditions |
| Business comparison | Lower output tax, potentially higher unrecovered input cost | Higher output tax, potentially more recoverable input tax |
To compare the options, model both the GST charged to the traveler and the input tax that can actually be recovered. A 5% choice is not automatically cheaper if the business loses substantial eligible credits on services and overheads. Conversely, the 18% option should not be selected solely for ITC without confirming that the service and documentation support it.
Air-ticket agents: a separate valuation rule
CBIC valuation rules provide a deemed valuation method for services relating to air-ticket bookings by an air travel agent: 5% of the basic fare for domestic bookings and 10% of the basic fare for international bookings. This rule is specific to air travel agents. It should not be generalized to a tour operator’s full holiday package, to a hotel-and-flight bundle, or to every service fee charged by a travel business.
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If a business performs both air-ticket agency work and tour-operator work, separate the activities in the contracts, invoices, and accounting records. Apply the valuation rule only to the activity it covers.
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Invoice wording and records to retain
Because the 5% entry depends on what the bill says and what amount it includes, invoice controls are central to the calculation.
Invoice checks
- Identify the supplier that is contracting with the traveler.
- Describe the tour or travel service rather than using only a generic “travel charges” label.
- State that accommodation and transportation are included when that is factually true and the 5% option is being used.
- Show the gross tour consideration on which GST is calculated.
- State whether the quoted amount is before or after GST.
- Separate a commission or arranging fee when the business is acting under an agency model.
- Keep package components and separately supplied items distinguishable in the accounting system.
Supporting file
A practical file should contain the itinerary, supplier and customer contracts, the issued invoice, component supplier invoices, evidence of who collected the customer’s money, and an ITC workpaper showing credits claimed or disallowed. This is practical documentation inferred from the rate conditions, not a separate statutory checklist stated in the rate schedule.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Common errors and how to correct them
Applying 5% to every holiday package
Why it fails: The 5% entry has explicit accommodation, transportation, and gross-billing conditions, and the service must fit the tour-operator description.
Correction: Map the supplier’s obligations and test each condition before selecting the rate.
Assuming one invoice proves a composite supply
Why it fails: A single price can describe either a composite supply, a mixed supply, or a package of separately supplied components.
Correction: Identify the principal supply and the ordinary course of business, then apply the relevant Section 8 rule.
Calculating tax on margin instead of consideration
Why it fails: A package operator using the gross-tour model is not automatically taxed only on its profit or markup.
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Calling 5% “no ITC” without reading the exception
Why it fails: The schedule states a same-line-of-business input-service exception.
Correction: Separate input services from goods and other costs, and document why each credit is or is not eligible.
Using the 2019 Council discussion as current law
Why it fails: A meeting document records historical discussion and does not replace the current notification or statute.
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Correction: Use it as context for the commission model, then confirm the current legal treatment before filing.
Applying the air-agent formula to a full package
Why it fails: The 5% domestic and 10% international basic-fare valuation percentages are for the specified air-ticket-agent service.
Correction: Keep air-ticket agency transactions separate from tour-operator package calculations.
A practical decision tree
- Does one business contract to provide or operate a tour? If no, analyze each supplier’s service separately. If yes, continue.
- Are accommodation and transportation included and shown on the bill? If yes, test the conditional 5% entry. If no, do not assume that entry applies.
- Is the billed amount the gross tour amount including those charges? If yes, the 5% condition is potentially met, subject to the service classification and current notification. If no, analyze the actual consideration and another applicable entry.
- Are components separately billed and is only a commission charged? If yes, analyze the intermediary service and verify the current rate; the 2019 Council discussion described 18% on the commission in that model.
- Is the package composite or mixed? Apply Section 8 only after identifying the principal supply or the highest-rate component, as the facts require.
- Which rate gives the correct net position after ITC? Compare output GST, recoverable input tax, customer pricing, and compliance with invoice conditions.
What this calculation cannot decide by itself
A generic formula cannot resolve every Indian GST issue in travel. The treatment may require additional analysis for cross-border itineraries, place-of-supply questions, unusual package components, principal-agent relationships, vouchers, cancellation amounts, or a contract in which different entities collect different parts of the price. The available rate material does not establish one answer for every such fact pattern.
For a disputed classification or a high-value package, have a qualified Indian GST adviser review the current notification, contracts, invoices, and accounting treatment. Keep the advice with the transaction file so the rate and ITC position can be explained later.
Bottom line for a bundled tour package
For India, start by identifying the actual supplier arrangement. A qualifying tour-operator service may use the conditional 5% rate only when the invoice indicates included accommodation and transportation and charges the gross tour amount including them. The alternative listed rate is 18% with ITC. Separately billed components and commission arrangements require a different analysis, while composite and mixed supplies follow Section 8’s principal-supply and highest-rate rules. Calculate the output tax only after those classification and invoice tests, then compare the result with the ITC that the chosen option actually permits.
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