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Business Compliance

Tour Operator – Legal Compliances

In this article, we will take a look at the various compliances involved in the business of tourism in India.

India has always been a major attraction to tourists. But the evolution of the industry has surged into the mainstream in recent years in India. Therefore, there are so many people who are finding employment in the tourism sector. According to the United Nations World Tourism Organization (UNWTO), the tourism sector provides 6-7 percent of the world’s total jobs directly and even more indirectly through the multiplier effect. The tourism sector in India is estimated at $117.7 billion in the year 2011 and is estimated to increase to $418.9 billion by the year 2024. So, there are so many opportunities for the new entrepreneurs who are starting their career in the tourism sector as tour operators.

Type of Business Entity

Tour operators these days have many preferences of business entities to choose from and the business strategy for the endeavor would play a significant role in finding the right fit. Most of the tour operators choose to have a Private Limited Company as it is one of the extensively used and acknowledged forms of business in India contributing a lot of benefits.

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A private limited company is undeniably the best for entrepreneurs who have ideas to offer online services and rapidly gauge up their business by using the power of the internet. Business entities like Limited Liability Partnership (LLP) or One Person Company (OPC) would be best for entrepreneurs who have plans to build their business steadily without any hurry.

GST Registration

The services provided by a tour operator are taxable under GST. So, the tour operators are required to acquire a GST registration. However small-scale tour operators need not pay GST if the cumulative turnover of taxable services does not exceed Rs.20 lakhs in the financial year. It is mandatory for businesses to register for GST, with a turnover of more than Rs. 20 lakhs (Rs.10 lakhs for northeastern states) annually.

GST Registration can be done online by registering your business on the official GST portal and then scan and upload all the required documents.

Government Approved Tour Operators

Though registration as a Government of India approved Tour Operator is not necessary, it is valuable and provides acknowledgment for the tour operator. The main ambition and objective of the scheme for recognition of tour operators are to reassure quality standards and services in the tourism sector. To become a tour operator recognized by the Government of India, the tour operator must fulfill certain prerequisites on the capital invested, number of employees, maintenance of minimum office space and other requirements. Further, an application must be made to the tourism ministry in the prescribed format to become a Government of India approved Tour Operator.

IATA Operator

The International Air Transport Association (IATA) is the trade association representing major air traffic in the world. IATA offers wide-ranging training and professional development services for tour operators, and IATA authorization is a very important seal of approval acknowledged worldwide. Therefore, it is essential for a tour operator to consider becoming IATA members and enjoy access to a wide range of benefits.

Conclusion

The government regulates only those industries that bear something of a strategic advantage either from the point of view of the economy or from the point of view of global optics. When it comes to the tourism industry, it is strategic in both ways. There are several parts of India, such as Goa, Kerala and Rajasthan that earn a major chunk of their revenues only from tourism. At the same time, it gives India the image of being an ancient civilization which is keeping abreast with the changing times.

Besides, the current government is spending a good amount of its budget on various tourism related leverages such as building the tallest statue in the world. So without a doubt, investment in the tourism sector is bound to pay rich dividends in the long run. If you have any other queries with regards to regulatory or legal matters, get in touch with us and we will ensure that you receive the best guidance from our team of expert professionals for your requirements.

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