How GST Plays a Crucial Role in a Travel Startup’s Future?

In this dynamic era, where India’s Tour & Travel industry is witnessing exponential growth, CA and a Financial Educator, CA Nitin Kaushik, has highlighted an often-overlooked factor that can make or even break a budding travel business, that is GST Registration.

In his detailed thread shared on X (formerly Twitter), the Financial Advisor explained that while entrepreneurs typically focus on gaining clients, bookings, and their business branding, GST Registration is the cornerstone that ‘quietly decides your fate even before your visiting card.’

Compliance with Credibility

He argued that GST Registration is not a mere tax formality but serves as an intangible business asset that elevates a side hustle into a recognised venture. Whether one is running tours, renting cars, or managing travel bookings, he noted that GST Registration provides business legitimacy, allowing access to formal contracts, collaborations with industry people, and smoother banking processes.  

The mandatory threshold remains unchanged- turnover above ₹20 lakh, or ₹10 lakh except in selected states, demands compulsory registration. But Kaushik emphasized the strategic value of voluntary GST registration, even for those falling below threshold. He wrote, “It lets you claim input tax credit and boosts client trust. And, paperwork speaks before your proposal does.”

According to Kaushik, the registration process (including generating a temporary reference number, submitting business details, documents uploading, and verifying through OTP) is simpler than most entrepreneurs think. These steps help create, “a formal business identity under India’s tax network,” unlocking prolonged structural benefits.

Why should Travel Operators opt for Regular GST?

He emphasised that travel businesses should register under Regular GST, not the Composition, as the Composition restricts input tax credits. For those operators who incur significant backend costs, the ability to claim credits directly impacts profitability and allows more competitive pricing.

He also emphasised the importance of correct service classification, noting that most tour and travel operators fall under SAC 998555- Reservation services for transport. Accurate coding ensures aligned invoicing, accounting, and compliance.

Apart from operational advantages, he underscored the reputational impact of GST registration. Banks treat registered entities differently, clients consider them as more credible, and opportunities for scaling open up.

He said, “GST isn’t just tax compliance- it’s your brand’s reputation certificate. In the long run, it tells customers and partners you’re not just another person. You’re a registered, recognized business.”