GST Council nominated Fitment Committee recommends a new margin scheme for tour operators

The majority of tour companies pay GST at a rate of 5% without ITC. The argument made by the tour operators is that their effective GST tax rate is very high. Thus GST Council nominated Fitment Committee has recommended a new margin scheme for tour operators.

Plan for tour operators: Dimensions

• Tour operators must pay GST on amounts determined on a considered basis (a specific 1% of the gross tour cost), which represents a reasonable margin of competition.
• When a tour is all-inclusive or includes hotel accommodations or transportation, a margin scheme is permitted.
• They won’t be allowed to avail the Input Tax Credit (ITC).
• Benefit: This will make taxes on tour operators more competitive.
• In the case of tours offered to foreign visitors that take place both partially inside and outside of India.
• Council is likely to approve the payment of GST by tour operators on the cost of travel to India.