TravTalk India Online Magazine
GST has transformed the business landscape for travel agents in India, adding layers of complexity, but also creating opportunities for those who approach it strategically. Manish Gadia, CA and Partner at GMJ & Co, shares tips on how the GST affects travel agents, the need for reforms, and strategies to improve business.
Surbhi Sharma
In an era of complex taxation and financial regulations, Goods and Services Tax (GST) has become an influential factor in the travel and tourism sector of India, bringing unique challenges that directly impact travel agents and service providers. Talking about the GST’s impact on travel agents, Manish Gadia, Chartered Accountant and Partner at GMJ & Co, says, GST is a transaction-based tax, which makes it crucial for businesses to fully understand their transactions to ensure compliance. For travel agents, whose business often involves multiple transactions, this is especially challenging. “GST is enormous in its impact. Without a detailed understanding of each transaction, travel agents risk calculating their tax obligations incorrectly,” he cautions.
The nature of GST requires travel agents to carefully assess how each sale or service affects their tax responsibility. “Misinterpretation of GST rules can lead to overpayment or underpayment of taxes, with potentially severe financial consequences. To avoid these pitfalls, I always advise that whosoever is paying GST should go to a consultant, understand the intricacies of different transactions they are entering into and then decide on tax payments,” he says.
Need for reforms in industry
While GST is here to stay, Gadia believes that reforms are possible and necessary to ease its burden on the travel industry. He points out a significant issue in the industry – lack of unity among travel industry associations. “Government has shown a consistent willingness to adapt and provide relief to businesses, but they need to unite and come up with a clear list of reforms they want from the government,” he says, adding that, “Currently, different associations within the travel sector are not aligned on the reforms they are asking for.”
Three-point agenda for ease of doing business
When it comes to ease of doing business, Gadia highlights three fundamental principles that can help travel agents not only navigate GST but also enhance business efficiency and customer trust.
v Embrace Tax Compliance: Gadia stresses that attempting to avoid tax is counterproductive. “First and foremost, every businessperson has to understand that you can’t escape paying tax,” he says. “Being compliant not only avoids legal issues but also contributes to long-term stability and customer trust,” he adds.
v Leverage GST Benefits: GST offers advantages, especially the input tax credit, which can significantly benefit both businesses and their clients. “With input tax credit, if you are operating properly, you can improve your own revenue while providing cost-effective options to your clients,” he says. “By correctly applying input tax credits, travel agents can reduce costs associated with GST, improving their margins and customer satisfaction,” he adds.
v Operate Transparently: Transparency is not just good ethics—it is also good business. Incorporating it in business operations is critical for long-term success, according to Gadia. He emphasises that building a transparent business fosters trust and avoids potential conflicts. “Customers will eventually discover how you are operating. So, it is always advisable to be transparent from the start,” he asserts. “By openly disclosing costs, tax obligations, and service fees, businesses can build lasting relationships with clients who appreciate honesty,” he adds.
Approach to GST compliance
Gadia sees opportunities for the travel industry to adjust and grow. He stresses the importance of industry collaboration and shared goals to make significant headway. “For travel agents to thrive under GST, a unified approach towards reform and adaptation is essential,” he concludes.
