Starting a Travel Agency in India – A Complete Guide

Last Updated at: May 15, 2020
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According to industry chamber, due to this lockdown, this is the one of the worst crises ever to hit the Indian tourism industry impacting all its geographical segments – inbound, outbound and domestic, almost all tourism verticals – leisure , adventure, heritage, MICE, cruise, corporate and niche segments.

Starting a travel agency in India - A complete guide
In terms of GDP contribution, India’s travel and tourism industry ranks 12th among 184 countries, and India’s tourism industry is expected to rise at 7.8 percent per annum in 2013-2023. India’s travel and tourism industry, valued at USD 117.7 billion in 2011, is expected to boom to USD 418.9 billion by 2022.

 

Starting from the Wonders of the world, Taj Mahal, there are several places that every person should see at least once in their lifetime. Thus, apart from attracting domestic tourists, India seems to be a magnet for International tourists as well. There are many states in India like Goa and North-Eastern states where the state’s primary revenue depends on tourism. Important cities have grown more cosmopolitan due to the increase of International tourists into the country. Thus, taking into account of all these things, tourism has become inevitable for the Country’s Revenue as a whole. Thus, travel agency became a new developing businesses in the eyes of the entrepreneurs. But then, starting a travel agency involves a variety of steps and processes.

Register Your Business Now

Business Entity Choices for Travel Agency

Any person who is willing to open a tourist agency can open it under various choice of business entities, and these choices are left with the entrepreneurs. Entrepreneurs usually choose Private Limited companies as the most preferred one among the rest, for the reasons that they  host a lot of benefits and subsidies from the government. People who wish to develop the business in baby steps generally do it under Limited Liability Partnership. In this case, cases offering online services won’t be possible. Besides, for Private limited companies, it is mandatory one have the internet as a tool for developing the business. In cases where the entrepreneur wishes to have a unique name and symbol, he can do so by way of registering as a trademark provided under the Intellectual Property Rights laws in India.

Taxation Procedures for Travel Agents

Most of the businesses in India are subject to certain amount of taxation by the Taxation Laws of our country. Similarly, travel agencies are taxed as service taxes for the services rendered by them. But then, there is a minimum slab wherein travel agencies with an annual turnover of less than 10 lakhs will be exempted from paying the service taxes. It is mandatory for all taxable travel agencies to obtain a service tax registration with the exception of these small scale travel agencies which falls below the taxable slab.

The rates of these taxes vary depending upon the different services that these travel agencies provide. Service taxes are collected based on the total amount billed for a particular service provided by that agency. The usual service tax rates are 12.35%, but then the government reduced the burden of the travel agency through a notice, revising all the tax rates for those services. According to which, 25% of the billed amounts are taxed for a packaged tour offered by them and 10% taxes are levied for the accommodation services alone rendered by them. Service taxes for the air tickets will be levied as 0.6%, in case of domestic tickets and 1.2% in case of international tickets as per Sec.6(7) of the Service tax rules.

How to Become A Government Approved Trade Agent?

There are various parameters including the invested capital amount, number of working staffs in the agency and also the office space. Thus, the agency must comply to these requirements to become a recognized trade agency. The application for this must be forwarded to the ministry of tourism in the prescribed format to be a government of India approved trade agency. The registration procedure is not mandatory but still, it is preferred to be a recognized travel agency. But the government encourages these recognitions, so as to maintain a definite standard in the services rendered by these agencies.

IATA Agent

IATA stands for International Air Transport Association which represents almost 84% of the total airlines in the world. This travel Association provides various training methods to travel agencies within its purview. It is really preferred travel agencies become a member to have access their offered benefits. It is also really important for a travel agency availing international travel packages to be a member of this association, as it gives a lot of discounts in the air services across the globe.

Conclusion

According to a statistics, India stands 12th in the GDP contribution for travel and tourism industry in the world. And there is a predicted 7.8% annual growth between the years 2013-2023. Thus, it is clear that tourism constitutes a big part in our country’s growth owing to which the Indian government has offered a lot of subsidies for start-up entrepreneurs in travel agencies.

 

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Starting a Travel Agency in India – A Complete Guide

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In terms of GDP contribution, India’s travel and tourism industry ranks 12th among 184 countries, and India’s tourism industry is expected to rise at 7.8 percent per annum in 2013-2023. India’s travel and tourism industry, valued at USD 117.7 billion in 2011, is expected to boom to USD 418.9 billion by 2022.

 

Starting from the Wonders of the world, Taj Mahal, there are several places that every person should see at least once in their lifetime. Thus, apart from attracting domestic tourists, India seems to be a magnet for International tourists as well. There are many states in India like Goa and North-Eastern states where the state’s primary revenue depends on tourism. Important cities have grown more cosmopolitan due to the increase of International tourists into the country. Thus, taking into account of all these things, tourism has become inevitable for the Country’s Revenue as a whole. Thus, travel agency became a new developing businesses in the eyes of the entrepreneurs. But then, starting a travel agency involves a variety of steps and processes.

Register Your Business Now

Business Entity Choices for Travel Agency

Any person who is willing to open a tourist agency can open it under various choice of business entities, and these choices are left with the entrepreneurs. Entrepreneurs usually choose Private Limited companies as the most preferred one among the rest, for the reasons that they  host a lot of benefits and subsidies from the government. People who wish to develop the business in baby steps generally do it under Limited Liability Partnership. In this case, cases offering online services won’t be possible. Besides, for Private limited companies, it is mandatory one have the internet as a tool for developing the business. In cases where the entrepreneur wishes to have a unique name and symbol, he can do so by way of registering as a trademark provided under the Intellectual Property Rights laws in India.

Taxation Procedures for Travel Agents

Most of the businesses in India are subject to certain amount of taxation by the Taxation Laws of our country. Similarly, travel agencies are taxed as service taxes for the services rendered by them. But then, there is a minimum slab wherein travel agencies with an annual turnover of less than 10 lakhs will be exempted from paying the service taxes. It is mandatory for all taxable travel agencies to obtain a service tax registration with the exception of these small scale travel agencies which falls below the taxable slab.

The rates of these taxes vary depending upon the different services that these travel agencies provide. Service taxes are collected based on the total amount billed for a particular service provided by that agency. The usual service tax rates are 12.35%, but then the government reduced the burden of the travel agency through a notice, revising all the tax rates for those services. According to which, 25% of the billed amounts are taxed for a packaged tour offered by them and 10% taxes are levied for the accommodation services alone rendered by them. Service taxes for the air tickets will be levied as 0.6%, in case of domestic tickets and 1.2% in case of international tickets as per Sec.6(7) of the Service tax rules.

How to Become A Government Approved Trade Agent?

There are various parameters including the invested capital amount, number of working staffs in the agency and also the office space. Thus, the agency must comply to these requirements to become a recognized trade agency. The application for this must be forwarded to the ministry of tourism in the prescribed format to be a government of India approved trade agency. The registration procedure is not mandatory but still, it is preferred to be a recognized travel agency. But the government encourages these recognitions, so as to maintain a definite standard in the services rendered by these agencies.

IATA Agent

IATA stands for International Air Transport Association which represents almost 84% of the total airlines in the world. This travel Association provides various training methods to travel agencies within its purview. It is really preferred travel agencies become a member to have access their offered benefits. It is also really important for a travel agency availing international travel packages to be a member of this association, as it gives a lot of discounts in the air services across the globe.

Conclusion

According to a statistics, India stands 12th in the GDP contribution for travel and tourism industry in the world. And there is a predicted 7.8% annual growth between the years 2013-2023. Thus, it is clear that tourism constitutes a big part in our country’s growth owing to which the Indian government has offered a lot of subsidies for start-up entrepreneurs in travel agencies.

 

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