Tour operators and travel businesses, paid in advance and settled much later.
Money received for a tour that has not yet taken place is a liability, not revenue. Getting that cut-off right at the period end, across bookings in several stages of completion, is the main reporting question.
The GST treatment of tour and travel services differs from that of services generally, and overseas packages and remittances can attract collection of tax at source. Both depend on the structure of the package and on the law in force for the period.
Accounting and reporting
- Revenue recognised on delivery of the tour or service, and the treatment of customer advances
- Cancellations, refunds and the provisions they require
- Reconciliation of supplier balances with hotels, carriers and operators
- Foreign exchange on overseas bookings, receipts and payments
- Working capital through a seasonal cycle
Regulatory
- GST rules applicable to tour operators and travel services, which differ from the general treatment
- Tax collected at source on certain overseas tour packages and remittances, where the law applies
- Foreign exchange regulations on payments made abroad
Internal controls
- Booking records matched to customer receipts and to supplier payments
- Authorisation of refunds and of cancellation charges
- Cut-off at the period end for tours in progress
- Reconciliation of collections held on behalf of suppliers
Questions that arise
- Are customer advances carried as liabilities until the service has been delivered?
- Are cancellations and expected refunds provided for at the period end?
- Is the correct GST and source-collection treatment applied to each type of package?
- Are foreign currency balances translated and the differences accounted for?
Official sources
- GST portal (opens in a new tab)
- Income Tax Department (opens in a new tab)
- Reserve Bank of India (opens in a new tab)
This page describes accounting and compliance considerations in the sector. Our firm provides professional services to entities in it, and does not operate travel or hospitality businesses.