GST on tours during lockdown

CA Manish Gadia, Partner, GMJ & Co, summarises the benefits introduced by the finance ministry under GST that could offer this industry some relief. He also takes into account GST on cancelled tickets in cases where the agent is refunded the money or provided a credit shell, as well as GST in case of rent agreements.

The recent COVID-19 pandemic has affected not only India but the world at large. Looking at the larger picture it seems the global economy is heading towards a recession. It is an undisputable fact that the travel and tourism industry has been the most affected industry due to the spread of the novel coronavirus. It is also likely that it would take longer than usual for the industry to bounce back to normal. Hence, in order to provide some reliefs to trade and industry, Ministry of Finance, under the leadership of Nirmala Sitharaman, has introduced various relief measures.

In this article, we have tried to summarise the benefits under GST that we consider would be of much relief and value addition to the tours and travel industry.

GST for tickets cancelled

Due to the nationwide lockdown and travel restrictions imposed by the government, cancellation of air tickets booked by travellers in advance was amongst the hot topics of discussion. As travel agents, many tickets may have been booked which would have been automatically cancelled by the airlines due to travel ban. With regard to the cancellation of air tickets and the GST paid on them, you can refer to the chart herein.

GST on rent

Due to the lockdown, offices, malls, shops, schools, hotels, etc., everything is shut. However, the rent metre for the same stays on. In such times, there is a question regarding the GST liability on the rent amount. In some cases, the landlord and tenant have agreed mutually for lower lease rents during the lockdown period, and in some cases the landlords have waived off the lease rentals for the lockdown period. However, as per the agreement, the lease rent is fixed and payable at specified intervals (e.g. monthly, quarterly) hence, the question arises whether GST would be payable on the actual amount of rent recovered (i.e. lower rent or nil rent) or at the amount as specified in the agreement? GST shall be payable on the amount as specified in the agreement.