How to start a travel agency or tour operator in India: registrations and licences

Choosing a structure

Many travel agents start as proprietors working with consolidators. As you take customer advances, sign hotel contracts and handle foreign exchange, limited liability becomes valuable, so growing agencies form an LLP or private limited company.

IATA accreditation and airline agreements look at financial standing and may require bank guarantees, which are easier to arrange through an established entity with audited accounts.

Registrations for travel businesses

There is no single national licence to run a travel agency. Registrations depend on whether you ticket flights directly, sell packages, handle inbound tourists or deal in foreign exchange.

How GST applies to travel services

Tour operators selling packages can charge 5% on the gross package value without input tax credit, or 18% with credit. Agents earning commission or service fees on air, rail, visa and hotel bookings charge 18% on that income. Air travel agents can choose to pay GST on a deemed value linked to the basic fare instead of actual commission, under the valuation rules.

Hotel stays up to ₹7,500 per room per night attract 5% without credit, and above that 18% with credit. Economy air tickets are taxed at 5% and other classes at 18%. Where you act as a pure agent and pass on costs at actual, GST applies only to your fee.

TCS on overseas packages and forex

Sellers of overseas tour programme packages must collect TCS from buyers. Under section 394(1) of the Income-tax Act 2025, the rate listed from 1 April 2026 is 2%. Collect it at the time of receiving payment, deposit it and file quarterly TCS returns; customers claim it against their tax.

Buying or selling foreign currency for travellers requires authorisation from RBI as a money changer or a tie-up with an authorised dealer. Do not handle forex without the right authorisation.

Ongoing compliance

Keep supplier invoices, customer contracts and cancellation terms for every booking. Clearly state refund and cancellation rules, since travel disputes are a common source of consumer complaints. File GST and TCS returns and reconcile airline and hotel statements monthly.

Renew IATA accreditation and any state tourism registration on time. If you employ staff, register for professional tax where applicable, and ESIC and EPF once thresholds are met.

Handling customer money and supplier contracts

Travel businesses collect advances weeks or months before travel. Keep customer advances in a separate account where possible, issue receipts for every payment and record GST on advances as the rules require. If a supplier fails, customers will look to you for refunds, so check hotel and transport partners before committing.

Written agreements with hotels, DMCs and transport operators should cover rates, allotments, cancellation windows and payment timelines. For inbound tourism, contracts with foreign agents should state currency, payment terms and which party bears exchange rate risk.

Pitfalls for travel agencies

Travel margins are thin, so choosing the right GST model for packages, 5% without credit or 18% with credit, has a real impact on profitability and pricing.

• Claiming input tax credit while charging 5% on packages.
• Selling overseas packages without collecting TCS.
• Dealing in foreign currency without RBI authorisation.
• Vague cancellation policies leading to refund disputes.

Step by step

1. 1Set up the entity

   Choose proprietorship, LLP or company and open a current account.

2. 2Register for GST and TAN

   Needed for invoicing and for TCS on overseas packages.

3. 3Local registration

   Shop and establishment and any state tourism registration.

4. 4Ticketing access

   Apply for IATA accreditation or tie up with a consolidator.

5. 5Decide GST model

   Choose 5% without credit or 18% with credit for packages.

6. 6Draft booking terms

   Cancellation, refund and liability terms for customers.

7. 7Optional recognition

   Apply for Ministry of Tourism approval if useful for your market.