30th June 2022 

To All Members 

Dear Colleagues, 

Subject: Recommendations and Clarification by GST Council - 47th Meeting of the GST Council held on 28th and 29th June, 2022 

As you are aware, IATO in its Union Budget Recommendations recommended certain amendments and grant of GST concessions to the Tourism Industry which has already suffered severe setbacks during the last 2 years due to COVID-19 pandemic. The GST Council in its 47th meeting held on 28th and 29th June, 2022 at Chandigarh has considered and accepted our recommendations favourably. The important amendments as recommended by the GST Council for our industry are as under:- 

1. Removal of GST on services provided outside India to foreign tourists:- 

IATO has recommended that GST/IGST may be fully exempted on the services provided by tour operators to the foreign tourists  outside India i.e. in neighbouring countries even if package includes India tour. 

It has now been clarified by the GST Council that “ Service provided by Indian Tour operator to a foreign resident for a tour partially in India and partially outside India is to be subject to tax proportionate to the tour conducted in India for such foreign tourist subject to conditions that this concession does not exceed half of tour duration”. Based on this recommendation, the Ministry of Finance will issue exemption notification which will be made effective from 18.07.2022.   

Clarification:- From the above it is evident that in case of combined packages of India and neighbouring countries like Nepal, Bhutan, Sri Lanka etc., if the number of days spent by the foreign tourist outside India are 50% or less of total duration, there would be no GST on that part (outside India) and GST would be applicable only on the portion of India package. However, if the number of days planned in the itinerary outside India are more than 50% of total duration, there would be no exemption at all  and GST would be applicable on the entire package. We will confirm our understanding from the wordings of the exemption notification as and when issued by the Central Government.  

2.        Exemption of GST on private ferry tickets at Andaman and Nicobar islands:- 

Presently GST @ 18% is applicable on private ferry tickets in Andaman as per cruise GST rate. However, service of transportation of passengers by public transport, other than predominantly for tourism purpose, in a vessel between places located in India, was exempted from GST.  The expression “public transport” was neither defined nor clarified by the Government. IATO had strongly represented to the MOF officials that these transport ferries operating in Andaman and  Nicobar Islands are not luxury / tourism  ferries or cruise but they are used as means of transport and is only source of connectivity between small islands and Port Blair. It was recommended that in view of the essential use of transport ferries, the GST rate should be either nil or maximum 5% as in the case of surface transport.  

The GST Council has now recommended to accept our case by defining the expression “public transport” as under:-   

“ The expression ‘public transport’ used in the exemption entry at SI No.17(d) of notification No.12/2017-CT(R), which exempts transport of passengers by public transport other than predominantly for tourism purpose, in a vessel between places located in India, means that such transport should be open to public for point to point transport [e.g. such transport in Andaman and Nicobar islands]” 

Clarification:- From the above proposed change,  it is clarified that there would be no GST for the ferry service hired for transport of passengers (including foreign tourists) used as public transport from point to point transport including in Andaman & Nicobar Islands. This is much awaited relief for the tourism industry. 

It is expected that the Government will soon issue notifications granting exemption / concession from GST. These notifications will come into effect from 18.07.2022 as already committed by the Government in the press release. We will continue to pursue rigorously with the Ministry of Finance and other forum for necessary change in the GST law keeping in view, our other Budget recommendations. 

Thanking you and with best wishes, 

Rajiv Mehra

President