GST Exemption for Tour Operator Services – A Simple Guide for Everyone

Introduction

If you’re a tour operator offering package tours to foreign tourists, and the tour covers places inside India and outside India (like Nepal, Bhutan, or Sri Lanka), then part of your service may be exempt from GST.

Let me explain how this works in a simple, clear way, without legal jargon.

Who Can Get This GST Benefit?

This exemption is only for tour operators when:

1. The tour is partly in India and partly outside India, and

2. The customer is a foreign tourist.

Who is a Foreign Tourist?

As per GST law, a foreign tourist is:

“A person who is not normally living in India, and who comes to India for a short stay of not more than 6 months, for tourism or other legal non-work purposes.”

So, if your client is an NRI who stays in India for years — not eligible. But if it’s a tourist from the US coming for a 10-day trip — eligible.

What Part of the Tour Is Exempt?

Only the part of your tour service that happens outside India is GST-free.

BUT – there’s a catch. The law puts a limit on how much you can claim as exempt.

You get exemption for whichever is lower:

1. The proportion of tour outside India based on the number of days, OR

2. 50% of the total tour cost

How to Count “Days” in the Tour?

The GST law is very specific:

• If your customer spends 12 hours or more in a place = Count as 1 full day
• If they spend less than 12 hours = Count as half a day

This helps in fairly calculating how much of the tour happened in India and how much happened outside.

How to Calculate GST Exemption? (Made Easy)

Let’s say the total cost of the tour is ₹1,00,000.

Now do two things:

Step 1: Find the ratio of outside India days to total days

Example:
3 days in Nepal (outside India)
5 days total (2 days India + 3 days Nepal)

So, 3 ÷ 5 = 60% → ₹60,000 out of ₹1,00,000

Step 2: Find 50% of the total cost = ₹50,000

Step 3: Compare both and take the lower amount as exemption

In this case:

You can claim ₹50,000 as GST-free

Not ₹60,000

The balance ₹50,000 is taxable under GST.

Examples for Clarity

Example 1:

3 days in India, 2 days in Nepal

Total price = ₹1,00,000

• Outside India days = 2
• Total days = 5
• 2/5 of ₹1,00,000 = ₹40,000
• 50% of ₹1,00,000 = ₹50,000
  Exempt = ₹40,000
  GST payable on = ₹60,000

Example 2:

2 days in India, 3 days in Nepal
Total = ₹1,00,000

• 3/5 of ₹1,00,000 = ₹60,000
• 50% of ₹1,00,000 = ₹50,000
  Exempt = ₹50,000
  GST on ₹50,000

Example 3:

2.5 days in India, 3 days in Nepal

Total = ₹1,00,000

• Total days = 5.5
• 3/5.5 = 54.54% = ₹54,545
• 50% = ₹50,000
  Exempt = ₹50,000
  GST on ₹50,000

Final Notes (Tips from a GST Expert)

• This exemption is very useful for travel agents and tour operators serving foreign clients.
• Always keep documents ready – passport copy, visa, itinerary, tour invoices.
• Track days properly based on 12-hour rule to avoid mistakes.
• Don’t forget — the maximum exemption is capped at 50%, even if most of the tour is abroad.

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Prepared By: CA Maniamran Kathiresan, Founder – GST India Daily, Partner – Sekharan Associates | WhatsApp: 9962226988