Tourism and travel are among the largest industries in India and generate significant employment. The UN World Tourism Organization (UNWTO) estimates that the travel and tourism industry contributes 6-7 per cent to the world's total employment.
| Tourism benefits other industries such as food manufacturing, services, construction, and foreign exchange, in addition to providing employment, income, and foreign exchange to the country. |
Starting with Travel Agency one of the 7 Wonders of the World, the Taj Mahal, there are several places in India that every person should see at least once in their lifetime. Thus, apart from having a huge scope for domestic tourism, India is a magnet for international tourists as well.
There are many states in India, like Goa and the northeastern states, where the state’s primary revenue depends on tourism. Other important cities like Delhi, Bangalore, and Mumbai have grown more and more cosmopolitan due to the influx of international tourists in the country.
Thus, taking all these things into account, tourism has become inevitable for the country’s revenue as a whole. However, making a mark in the tourism industry is not easy, and starting a travel agency involves a variety of steps and processes.
Business Model Choices for Travel Agency
Any person who is willing to open a tourist agency can do so under various business entities, and these choices are left to the entrepreneurs. Private limited companies are typically chosen by entrepreneurs as their preferred option over others because they receive numerous government benefits and subsidies.
People who wish to develop the travel business slowly generally do it under a limited liability partnership. In this case, offering online services won’t be possible. Besides, for travel companies, it is imperative to use 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 register a trademark under the intellectual property rights laws in India.
GST Taxation for Travel Agents
GST registration is required for all suppliers with a total annual turnover of more than ₹ 20,00,000. The number of category states is limited to ₹100,000. Furthermore, the threshold limit of ₹ 200,000 does not apply in the case of taxable inter-state supply.
The following table lists the SAC codes of travel agents for outward supply.
| Service | SAC Code |
| Reservation of accommodations, cruises, tour packages, etc | 998552 |
| Reservation of convention centers, congress centers and exhibition halls etc | 998553 |
| Reservation of event tickets, cinemas, entertainment, and other recreational services | 998554 |
| Reservation of transport services | 998551 |
| Reservation of tour operator services | 998555 |
| Other travel arrangements and related services | 998559 |
| Travel insurance & freight insurance services | 997136 |
| Tourist guide service | 998556 |
| Visitor information and tourism promotion services | 998557 |
| Provision of wholesale trade services on a fee/commission or contract basis | 996111 |
| Retail trade services, provided on a fee-based or commission-based basis |
996211
|
How to Become A Government-Approved Trade Agent?
There are various parameters for becoming a government-approved trade agent such as invested capital amount, the number of working staff in the agency, and the office space. An agency must comply with these requirements to become a recognized trade agency.
The application for this must be forwarded to the ministry of tourism in the prescribed format by a recognized travel agency. Though the registration procedure is not mandatory, it is still preferred to be a recognized travel agency over an unrecognized travel agent. Moreover, 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 manuals to travel agencies within its purview.
It is strongly advised that travel agencies become a member of IATA in order to take advantage of the benefits available. It is also really important for a travel agency offering international travel packages to be a member of this association, as it gives a lot of discounts on air services across the globe.
The Takeaway
According to statistics, India ranks 12th in the world in terms of travel and tourism GDP contribution. And there is a predicted 7.8% annual growth between 2013 and 2023. Thus, it is clear that tourism constitutes a big part of our country’s growth, owing to which the Indian government has sanctioned a ton of subsidies for start-up entrepreneurs in the travel agency space.
