Two supplies in one booking
When an agency sells a ticket, the airline supplies the transport and charges GST on the fare. That GST appears on the ticket and is reported by the airline. The agency collects the fare on the airline’s behalf.
The agency also supplies its own service: booking the ticket. Whatever the agency earns for that, whether a service fee charged to the customer or commission and incentives paid by the airline, is the agency’s taxable value.
How each component is treated
| Component | Supplied by | How GST applies |
|---|---|---|
| Air fare | Airline | Airline charges GST on the fare at the rate for the class of travel. The rate for economy is lower than for other classes. |
| Service fee to customer | Agency | Agency charges GST on its fee at the rate for travel agent services and shows it on its own invoice. |
| Commission from airline | Agency to airline | Generally a taxable service by the agency to the airline, invoiced to the airline. |
| PLB and other incentives | Agency to airline | Generally treated as consideration for a service to the airline and taxed accordingly. |
Tax rates, thresholds and rules change through notifications and the annual Finance Act. Use this guide to understand the process, and confirm the current position with your chartered accountant before filing.
The optional valuation for air travel agents
The GST valuation rules give air travel agents an option. Instead of computing tax on the actual commission or fee, an agent can pay GST on a deemed value: a fixed percentage of the basic fare, with one percentage for domestic bookings and a higher one for international bookings. The basic fare is the fare excluding taxes and airline surcharges.
The option suits agencies whose earnings are hard to compute per ticket. Whichever method you choose, apply it consistently and agree it with your CA.
Invoicing the customer correctly
- Show the airline fare as collected on the airline’s behalf, separately from your own charges
- Show your service fee and the GST on it as your own taxable supply
- Capture the customer’s GSTIN for corporate bookings, so the airline invoice carries it and the client can claim input tax credit
- Report your taxable supplies in GSTR-1, split into B2B and B2C as required
GST for air tickets in SYSTACC
SYSTACC reads the fare, taxes and commission from the GDS file, so the airline’s amounts and your own charges stay separate from the start. Invoices show the right split, and GSTR-1 B2B, B2CS, HSN and CDNR outputs are prepared from the same daily transactions.
