Opening a travel agency in India is an opportunity many businessmen are seizing at the moment. India’s travel and tourism sector is experiencing a significant boom, driven by government initiatives promoting domestic travel. Our company formation agents in India can help investors open their businesses here. They can also assist them in obtaining the necessary licenses and permits. Read more to learn how to register the company in India, choose a business model and deal with the economic system here.
Table of Contents
The complete guide to opening a travel agency in India
When opening a company here, the prospective directors must secure their unique director identification number and a digital signature certificate, which are the mandatory electronic credentials for all official filings. Following this, the promoter reserves the intended company name. Every company, including those in the travel sector, registers directly with the Ministry of Corporate Affairs. Upon receiving the certificate of incorporation, the new company must then register for the Goods and Services Tax (GST) and comply with local municipal regulations under the Shops and Establishment Acts.
It is important to know, especially as a foreigner opening a company in India, that every company registered in India must have at least one director who is an indian resident. Hiring a nominee director is crucial to open the company. There is no specific travel agent license in India, however it does make your company look more trustworthy if it gets the government’s stamp of approval. It shows customers and other businesses that you are reliable.
When opening a travel agency in India, gaining voluntary accreditations like that from the Ministry of Tourism (MOT) or IATA is essential. IATA is the International Air Transport Association accreditation, and it is essential for issuing international air tickets directly. This process requires the agency to meet stringent financial guarantees and security protocols set by the association. The IATA accreditation process is completed by submitting the unified SPICe+ form. Our specialists in company formation in India can help you open any type of business and can help you in the process of acquiring your licenses.
The two travel business models in India
Since the Indian government is starting to roll out the new digital system (ONDC), business owners today have a choice. When they open a travel agency in India, they can run it using the established big platform model or adapt to the emerging open network model. Here are more details about each one:
- The old way – Your company acts as a single, closed digital store. All flights, hotels, and packages are sold only through your website or app. When you open a travel agency in India and choose this model, the biggest legal risk comes from customer complaints and lawsuits. You need strong legal agreements to deal with complex issues like refunds, cancellations, and disappointment over the quality of service;
- The new way (ONDC) – This model uses the government-backed ONDC (Open Network for Digital Commerce). Your agency’s unique travel packages can be seen and purchased directly through any app connected to the network, like banking or travel apps. This helps small agencies compete because it cuts the cost of finding new customers. You are found through the national network instead of expensive ads.
Financial & tax compliance when opening a travel agency in India
There are several taxes that businessmen should take into consideration when starting a company in India in tourism. Here are the main ones:
- Corporate Tax Rate – The standard corporate income tax rate for domestic companies with turnover up to ₹400 crore is approximately 25.17% (including surcharge and cess).
- GST on travel agent commission – Travel agents and tour operators typically charge 18% GST on the commission or service fee earned from the transaction.
- GST on tour operator services – When opening a company in India and selling consolidated tour packages there is the option to pay GST at a concessional rate of 5%;
- IATA financial security deposit – Agencies seeking IATA accreditation must furnish a bank guarantee or security deposit, which can range from ₹5 to ₹25 or more, depending on their forecasted sales volume.
Managing the company formation process and the finances can be challenging as a new business in India. Even if the travel agent license in India is not mandatory, that does not mean that you don’t have to treat the entire process with the most professional attitude. Getting a license and a certified team to handle the company formation process can represent a real advantage for your firm. If you are in need of an accountant in India, you can work with our certified accountants here.
Opening a travel agency can be a hard process sometimes, but it can be a great choice, especially if you are committed to flawless execution. Our company formation experts in India make this journey easier and quicker. If you need help with setting up this type of business, make sure to contact us!