GST in journey and tourism

CA. H.M. Talha Rahman, Partner, Selvarajan & Co., Chartered Accountants, Chennai, speaks approximately what GST might mean for the united states of America’s economy at the same time as giving very accurate and deep expertise about the computation involved for the travel enterprise. “There is a massive hue and cry about GST, and those are speculating loads approximately this. What we fail to apprehend is that it’s far an aggregate of a maximum of the oblique taxes in a new form, which brings the idea ONE NATION ONE TAX.”


The GST was carried out effectively through few countries many years ago. I recall having waited in a queue in Singapore Airport for reimbursement of GST 15 years ago. At that time, Indians used to save loads in Singapore, which became popular for tape recorders, VCRs, perfumes, and different fancy stuff. When we purchase them in Singapore, the cost of the item comes with an aspect referred to as the GST, which needed to be paid using the nearby residents as the final purchaser. But a foreign national should declare the refund of GST paid using displaying the bill and items at the time of departure from the USA. Hence It is known as a consumption tax.

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To placed it genuinely, “Cascading Tax Effect” way tax on tax. Previously while a manufacturer sells his product, he adds Excise Duty to his promoting rate and ships the products to the distributor. In turn, whilst the distributor sells identical goods to the give-up consumer, he provides his income margin and also prices VAT on the introduced expenses, including Excise Duty. In other words, a tax (VAT) is paid on another tax (Excise Duty), which has cascading tax effect.


Now inside the GST technology, in this case, both Excise Duty and VAT are clubbed as GST, and the GST charged through the producer to the distributor may be adjusted as ITC (Input Tax Credit) for that reason avoiding the tax on tax. To explain the idea in simple phrases, let us assume that a distributor referred to as “B” buys 1000 units of a product from a producer called “A” at a rate of Rs. One hundred consistent with the unit. The Invoice by A will appear to be this:

SlNo Description No of Units Unit Price Total Amount
1 Sale of Product 1000 100 1,00,000.00
2 GST @ 12% 12,000.00
3Total Invoice Amount 1,12,000.00
(In this case, A collects Rs. 12000 from B as GST and pay the complete amount to the Government)

Now allow us to again count on that B promote a lot of these merchandise to a store called “C,” retaining five% as his earnings margin, and his selling charge might be Rs. A hundred and five according to the unit. The Invoice of B will appear like this:

Sl.No. Description No of Units Unit Price Total Amount
1 Sale of Product 1000 105 1,05,000.00
2 GST @ 12% 12,600.00
3 Total Invoice Amount 1,17,600.00

(Now B Collects Rs. 12600 from C as GST, but he’ll not pay the complete quantity to the Government, rather he is allowed to deduct Rs. 12000/- He has already paid to A as GST and pays handiest the balance quantity of Rs. 600 to the Government. This credit of Rs. 12000 is referred to as ITC, Inward Tax Credit). If you observe in the above instance, the tax isn’t levied on tax, and subsequently, GST will no longer have any cascading tax effect.


One of the greatest benefits of GST is the seamless go with the flow of “enter credit” (please refer to the instance above: Rs. 12000 paid by using B in the direction of GST to A is ITC of B) throughout the chain and across us of a. All taxes (GST) paid to a registered provider for the acquisition of goods (which include capital items) and supply of offerings may be deducted as ITC from the GST accumulated out of your bills and the balance tax best want to be paid as tax. There are few exceptions; for example, the GST paid on Motor Car or Motor Cycles, etc., via the non-delivery agencies cannot be used as ITC.


The compliance mechanism of GST goes to be a first-rate roadblock for small buyers and carrier carriers. Every registered dealer has to record 3 returns in a month and one annual return, making the total quantity of returns to be filed as 37 in keeping with annum. These returns are to be filed electronically on a platform called GSTN (GST Network) and require exquisite understanding, accuracy, and skill. It is without a doubt hard, if now not possible, for small-timers to comply with these requirements on a month-to-month foundation. It is strongly advised to apply the offerings of Chartered Accountants or Tax Return Preparers appointed by the branch.


1. Small Manufacturers, investors, sellers, and provider vendors whose turnover does no longer exceeds Rs. 20 lakhs in a financial year are exempt from the registration and fee of GST.
2. Composition Scheme: Those small buyers whose turnover exceeds Rs. 20 lakhs but beneath Rs. 75 lakhs can opt for the Composition Scheme, which permits them to pay GST at a decrease price to be constant by GST Council, with a purpose to now not be less than 1%. But they can not avail of ITC, and that they can’t undertake any interstate transactions.
3. Unfortunately, the small service providers cannot choose the composition scheme.


The tourism industry and travel and excursion retailers are dealing with a tough time due to various factors like no fee by way of the airways, direct advertising of airways, higher taxation, negative tourist infrastructure, and many others. Their main assets of earnings are indexed under:
1. Commission from Airlines, Cruise Companies, Travel Insurance Companies and so on
2. Sale Tour Packages, both inbound and outbound
3. Travel Related Services like Visa, Passport, etc.
4. Incentives Received from CRS Companies