Running a travel agency in India means dealing with multiple currencies, varying commission structures, GST on services, TCS on international packages, and vendor payments that don't always come with proper invoices. Here's how to keep your books clean without losing your mind.
Why travel accounting is uniquely complex
Unlike a regular retail business, travel agencies face:
- Mixed revenue models - sometimes you earn commission, sometimes you mark up packages, sometimes you charge service fees
- Multi-currency transactions - international packages involve USD, AED, THB, EUR conversions
- Advance payments - clients pay 30–50% upfront, balance before travel
- Vendor reconciliation - hotels, airlines, DMCs all have different payment terms
- TCS collection - you collect tax on behalf of the government for international packages
Setting up your books
Choose your accounting method
Cash basis (record when money moves): Simpler, works for small agencies with fewer than 50 bookings/month.
Accrual basis (record when transaction happens): Required if your turnover exceeds ₹1.5 crore, and better for tracking what clients owe you.
Most small agencies start with cash basis and switch to accrual as they grow.
Essential ledger accounts
At minimum, maintain these:
- Income accounts: Tour package sales, Service fees, Commission income
- Expense accounts: Vendor payments (hotels, transport, guides), Marketing, Office expenses, Software subscriptions
- Tax accounts: GST output (collected), GST input (paid), TCS collected, TDS deducted
- Client accounts: Advances received, Balance receivable
- Vendor accounts: Amounts payable, Advance to vendors
Software options
- Tally Prime - most popular in India, handles GST well
- Zoho Books - cloud-based, good for small teams
- Google Sheets - free, but no automation (works if you're disciplined)
- Vyapar - mobile-first, good for solo agents
GST for travel agencies
Registration threshold
If your aggregate turnover exceeds ₹20 lakh (₹10 lakh in special category states), you must register for GST.
GST rates on travel services
| Service | GST Rate |
|---|---|
| Domestic tour packages | 5% (no ITC) or 18% (with ITC) |
| International tour packages | 5% (no ITC) or 18% (with ITC) |
| Air tickets (domestic economy) | 5% |
| Air tickets (business class) | 12% |
| Hotel room (tariff ≤ ₹7,500) | 12% |
| Hotel room (tariff > ₹7,500) | 18% |
| Service fee / consultation | 18% |
The 5% vs 18% choice
Travel agents can choose:
- 5% GST on the gross package value - simpler, no input tax credit
- 18% GST on the margin (selling price minus cost) - complex, but you claim ITC on purchases
Most small agents choose 5% on gross for simplicity. If your margins are thin and you have significant input tax, 18% on margin might save money.
TCS compliance
For international tour packages:
- Collect 2% TCS on the package amount from the client
- Deposit TCS with the government quarterly
- File TCS returns (Form 27EQ) quarterly
- Issue TCS certificates (Form 27D) to clients
Important: TCS applies to the total amount collected from the client, not just your commission. If you sell a ₹2,00,000 international package, you collect ₹4,000 as TCS.
Daily bookkeeping habits
- Record every payment received - even partial advances
- Keep vendor invoices - photograph and file immediately
- Reconcile bank weekly - don't let it pile up for month-end
- Separate personal and business accounts - open a current account for your agency
- Track pending receivables - know who owes you money at all times
Common mistakes to avoid
- Not issuing invoices - even if clients don't ask, you need them for your books
- Mixing personal and business expenses - makes tax filing a nightmare
- Ignoring TCS - penalties for non-compliance are steep
- Not saving for GST - set aside tax collected immediately, don't spend it
- Paying vendors without invoices - you lose ITC and audit trail
Monthly checklist
- Reconcile bank statements
- File GST returns (GSTR-1 and GSTR-3B)
- Deposit TCS collected
- Send payment reminders for overdue client balances
- Review vendor payment schedules
- Update profit/loss for the month
How TripDraft helps with accounting
TripDraft generates GST-compliant invoices automatically for every quote accepted. The pricing engine calculates TCS, shows margin breakdowns, and exports data you can hand directly to your accountant.