Starting a travel business in India: what you actually need
There is no licence to start a travel business in India. You need a registered business entity, a PAN and a current account, state Shops and Establishments registration, and GST registration once turnover crosses Rs 20 lakh (Rs 10 lakh in special category states). Everything else, including IATA accreditation and Ministry of Tourism recognition, is optional and depends on what you sell. A lean domestic agency can be operating legally for under Rs 50,000 in setup costs.
The short version of what is mandatory
| Requirement | When it applies | Rough cost |
|---|---|---|
| Business entity (proprietorship, LLP or private limited) | Always | Nil to Rs 15,000 |
| PAN and a current account in the business name | Always | Nil |
| Shops and Establishments registration | Always, state level | Rs 1,000 to Rs 5,000 |
| GST registration | Above the turnover threshold, or immediately for inter-state supply and most online selling | Nil, plus filing costs |
| Udyam (MSME) registration | Optional but free and useful | Nil |
| TAN | Once you start deducting TDS | Nil |
| Professional tax | State dependent | Small, annual |
| IATA accreditation | Only to issue airline tickets yourself | Significant, including a bank guarantee |
| Ministry of Tourism recognition | Voluntary credential | Application fee, plus eligibility criteria |
Choosing the entity
A proprietorship is the fastest and cheapest way to start and is what most one-person agencies use in year one. It is fine until you take client money at scale, at which point unlimited personal liability starts to matter.
An LLP gives you liability protection with lighter compliance than a company. A private limited company is what you want if you plan to take investment, hire properly, or contract with corporates who run vendor due diligence. Many corporate travel desks will not empanel a proprietorship.
You can start as a proprietorship and convert later. Plenty do. Just be aware that converting mid-stream means re-doing your GST registration, your bank accounts and your supplier contracts.
GST, which is where new agencies lose money
Registration becomes mandatory once your turnover crosses Rs 20 lakh of turnover in a financial year, Rs 10 lakh in the special category states. It also becomes mandatory much earlier in practice, because inter-state supply and selling through most online platforms trigger it regardless of turnover. If you are in Bengaluru selling a Goa package to a client in Delhi, you are making an inter-state supply.
On the rate itself you have a genuine choice as a tour operator: 5% on the gross package value with no input tax credit, or 18% with full input tax credit. The 5% model keeps your headline price lower and your accounting simpler. The 18% model lets you recover the GST your suppliers charged you, which matters more as your supplier invoices grow.
When you act purely as an agent rather than an operator, GST is 18% on the commission you earn, not on the value of the ticket or room you booked.
The hotel GST slabs you will be quoting against
Rates as rationalised by the 56th GST Council with effect from 22 September 2025, which removed the old 12% slab. These are the rates your client sees on the hotel bill, so they belong in your quote as a clearly separate line.
| Room rate per night | GST |
|---|---|
| Up to Rs 1,000 per room per night | Nil |
| Rs 1,001 to Rs 7,500 | 5%, no input tax credit |
| Above Rs 7,500 | 18%, full input tax credit |
TCS on overseas packages
If you sell an overseas tour programme package, you collect tax at source from your client. The current position is A flat 2% on overseas tour programme packages from the first rupee, with no threshold, following the Finance Act 2026 with effect from 1 April 2026. This replaced the earlier 5% and 20% slab structure.
TCS is not a cost. It is advance tax credited against your client's PAN and adjusted or refunded when they file their return. Say so plainly to clients, because the number is large enough to lose you a booking if they think it is a fee you invented. Put it as its own line on the invoice and explain the refund mechanism.
Note that the definition matters. A bundled package of two or more components sold by one seller is a tour programme package. Components bought separately by the client from different sellers are generally not, and fall under the ordinary LRS rules instead.
What you can skip in year one
- IATA accreditation. Book flights through a consolidator instead. The bank guarantee alone is a poor use of early capital
- An office. Most new Indian agencies run from home or a coworking desk for the first year. Clients meet you on WhatsApp
- A booking engine. You do not have the volume to justify one, and a good quote sent as a PDF converts better than a bad engine
- Staff. Hire your first person when you are turning down work, not before
- Ministry of Tourism recognition. Useful later for inbound and for government tenders, not on day one
Honest startup costs
The working capital line is the one that surprises people. Your supplier wants paying at or before check-in. Your client pays a deposit and settles the balance later, and sometimes after they return. That gap is your business, and it is why agencies with plenty of bookings still run out of cash.
| Item | Lean | Comfortable |
|---|---|---|
| Entity registration and compliance setup | Rs 3,000 | Rs 25,000 |
| Domain, email, basic website | Rs 5,000 | Rs 60,000 |
| Branding and collateral | Rs 0 | Rs 30,000 |
| First three months of working capital | Rs 50,000 | Rs 5,00,000 |
| Marketing to first customer | Rs 0 | Rs 50,000 |
| Total to first booking | Under Rs 60,000 | Around Rs 6,65,000 |
The first real decision: where your hotels come from
Registrations take a week. Finding a source of hotel rates that lets you quote competitively takes longer and matters more, because it determines whether you can win a booking at all against an agency that has been buying for a decade.
You have three options, covered properly in the sourcing guide: contract directly with hotels, buy from a B2B platform, or work with a wholesale desk. Each has a different cost, a different lead time and a different floor on how good your rate can be.
When you need hotel rates
We are a wholesale desk, not a course and not a platform. 912 properties contracted directly across 30 Indian states, net rates to verified travel businesses, no joining fee and no minimum volume. Ask us anything about sourcing, including whether we are the right answer for your booking.
Ask the desk on WhatsApp Trade only. No joining fee, no subscription, no minimum volume. We never sell to consumers.Frequently asked
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Written for the Indian travel trade by the Rezort.in desk. Regulatory and tax positions checked September 2026 and statistics checked September 2026; both change, so confirm anything you are pricing against with your own advisers and against the primary source. Corrections to partners@rezort.in.