How to Open a Travel Agency in India

Travel in India is no longer limited to big operators and legacy agencies. With frequent work travel, shorter leisure trips, and easy access to online booking systems, the industry now offers real room for new, well-run agencies.

In 2025, India’s travel and tourism market reached around USD 25 billion. And the online sales are expected to reach nearly 60% of the sector’s revenue by 2029. For anyone planning to start a business in India within the tourism space, understanding these fundamentals becomes essential.

If this is your first venture, you might want to familiarise yourself with the basic company formation process as well. A simple introduction is available in this guide on starting a company: How to Start a Company: The Easiest Way!

If you are planning to start a travel agency, this blog serves as a practical guide. It explains how the business model works, how to choose the right structure, the registrations required, and the key GST and TCS compliance points you need to follow.

How the Travel Agency Business Model Works

A travel agency appears simple on the outside, yet most of the work involves coordination and timing. The money usually comes from commissions, service charges, or convenience fees. Some agencies stick to ticketing. Some create full packages.

Before getting into licences, taxes, and compliance, it helps to see how travel businesses are actually structured. Your role in the trip determines both responsibility and how you earn.

Travel Agent

Handles bookings for flights, hotels, transport, and activities. Earns on commission or a fixed fee.

Tour Operator

Designs complete itineraries and takes responsibility for the entire trip. Their tax and pricing methods differ.

There are two broad ways to earn:

• Commission-based model where the agency earns from airlines, hotels, and partners
• A package-based model where the agency builds its own itinerary and adds its margin

Margins matter because competition is strong and customers compare prices in seconds. A well-built vendor network helps maintain profitability.

Select the Suitable Business Structure for a Travel Agency

Choosing the right business structure guides how your agency is taxed, the level of personal liability you take on, and the confidence your clients and vendors place in you.

Sole Proprietorship 

For a home-based travel agency, Sole proprietorship firm registration is best option. You can operate under a trade name, manage your taxes as an individual, and manage your bookings independently.

Partnership or LLP

This works when two or more people are involved. A traditional setup works well when you want a quick start through partnership firm registration. It is simple to start and involves fewer formalities.

An LLP registration, on the other hand, suits businesses that want limited liability and a more structured compliance framework.

Private Limited Company

This structure is often chosen by agencies looking to scale or attract investors through private limited company registration. Many vendors and franchise networks also prefer dealing with companies rather than individual operators.

Quick Comparison of the Business Structure

Structure	Suitable For	Key Benefit
Proprietorship	Solo founders	Easy to start and low cost
Partnership/LLP	Multi-founder setups	Shared workload, LLP offers limited liability
Private Limited	Scalable agencies	Greater credibility and vendor acceptance

Mandatory Registrations for Travel Agency Before Operations

Before dealing with GST or licensing, complete the basic setup.

Task	Purpose
Business registration	Creates legal identity for the agency
PAN	Required for tax filings and compliance
Shops and Establishment registration	Required in many states for any commercial premises, including home-based offices
Bank account	Enables business transactions and payments
Import Export Code (IEC)	Required only if the agency receives foreign currency or works directly with overseas partners

If you want to understand the other licences and permits that may apply to your travel business in India, you can refer to this guide: Types of Business Licenses and Permits in India with Examples

GST Registration for Travel Agencies

GST registration becomes mandatory once your service turnover crosses ₹20 lakh in most states (₹10 lakh in special category states). You may also register voluntarily if you want to work with corporate clients or issue GST invoices from day one. Many small home-based agencies begin without GST because they stay below the threshold.

GST Rules for Travel Agents and Tour Operators (Rule 32)

Travel agents are taxed differently under GST. Rule 32 allows GST to be calculated on commission or service charges, not on the full value of the tour package.

Key points:

• GST is charged on the commission earned, not the entire package amount collected from clients.
• Standard GST rate on agent commission is 18%.
• For flight bookings, GST is charged on a fixed percentage of the basic fare (5 percent for domestic and 10 percent for international). This calculation is based on a notified notional value, not the actual commission.
• If a travel agent charges a convenience fee, GST applies at the full rate on that fee.
• Tour operators offering all-inclusive packages follow a different valuation method and cannot use Rule 32. Their GST applies on a portion of the total package value.

These rules lighten the GST load for agents who earn mainly through commissions. If you want to explore related options available to small businesses under GST, this guide gives a good overview: Understanding GST Composition Scheme for Small Businesses

TCS on Overseas Tour Packages

If your agency sells overseas tour packages, Tax Collected at Source (TCS) applies under the Income Tax Act. Key points:

• TCS applies to every overseas tour package, regardless of value
• The usual rate is 5 percent of the total package cost
• The rate rises if the customer does not share PAN or Aadhaar
• Agencies must collect TCS at booking and report it in monthly and quarterly filings
• LRS remittances follow separate TCS rules and should not be mixed with package-based TCS

This applies only to overseas packages, not domestic travel.

Travel Agency Licences and Approvals: What Is Optional vs Mandatory

Travel agencies in India operate without needing official permission. Still, approval from the Ministry of Tourism can increase trust, open doors to supplier networks, also strengthen global connections.

Special approvals apply only in specific cases:

• Adventure tourism: State-level permissions may be needed for safety standards, equipment checks, and activity regulations.
• IATA accreditation: Required only if you want to issue air tickets directly through the BSP system. Many agencies work through host agents or consolidators instead.
• GST registration: Mandatory once your service turnover crosses ₹20 lakh in most states, or earlier if you want to issue GST invoices.

If you choose to apply for MoT recognition, you will need:

• Application fee
• Business registration documents
• PAN and GST details
• Audited financial statements and tax returns
• Paid-up capital certificate (amount varies by category such as Inbound, Domestic, Adventure, or Travel Agent)
• Bank reference letter
• IATA approval, if relevant
• Proof of office premises
• Minimum four qualified staff
• Travel or tourism experience or qualification (can be met by the owner or staff)
• Safety and service declarations

Office size rules apply only for MoT recognition. Most locations require at least 150 sq. ft., while metro cities may require around 200 sq. ft. Approval usually takes three to six weeks if documents are complete.

Travel Agency Startup Cost in India

Startup costs vary by model and scale. A home-based agency remains the most affordable, while physical offices and franchises require higher investment.

Home-Based Travel Agency

Lowest entry cost.

• Initial setup: ₹1.3 lakh to ₹3.7 lakh
• Monthly costs: ₹15,000 to ₹60,000

Best for solo founders and online-first agencies.

Brick-and-Mortar Travel Agency

Higher credibility, higher costs.

• Initial setup: ₹5 lakh to ₹20 lakh
• Monthly costs: ₹3 lakh to ₹12 lakh

Suitable for walk-in heavy locations.

Franchise Travel Agency

Brand support, higher fees.

• Initial setup: ₹12 lakh to ₹35 lakh
• Ongoing royalty: 3 to 10 percent

Works if location and footfall are strong.

Overview of Travel Agency Business in India

Aspect	Details
Typical investment for small independent setups	₹4 lakh to ₹8 lakh
Office space	200 to 400 sq. ft depending on the model
Staff	4 to 7 people for larger agencies or those seeking recognition
Profit margin	10 to 15 percent
Average sale value	₹3,000 to ₹4,000 per tour

Margins tend to rise with repeat customers, negotiated vendor rates, and packaged itineraries.

Note: Investment ranges should be viewed model-wise. Home-based setups usually run under budget, while brick-and-mortar and franchise models start much higher. This helps avoid confusion around the overall minimum investment figure.

How to Apply for a Travel Agency License in India

The licence mentioned here comes from the MoT, since India doesn’t mandate one for operating a travel agency. Though not required, MoT approval is sought by numerous firms. mainly to gain trust while expanding business links at home or abroad.

To apply for MoT recognition, complete the following steps:

• Register your business under a suitable structure
• Fill out the prescribed MoT application form
• Gather the required documents, including:
  • Financial statements
  • Office proof
  • Staff details
• Submit the form along with the application fee
• Allow time for document checks and office verification
• Receive recognition once all conditions are met

Processing usually takes 3 to 6 weeks, depending on how quickly verification is completed.

Creating Visibility for Your Travel Agency Online and Offline

Most travel bookings now begin online. Even agencies that rely on walk-ins lose enquiries if they lack a basic digital setup. A clear, functional presence helps customers trust you before they ever speak to you.

At a minimum, your agency should have:

• A simple, easy-to-use website
• Clear tour and service listings
• An enquiry or booking form
• Secure payment options

If your website collects customer data, add a short privacy notice explaining what is collected and why. Agencies issuing GST invoices should display their GSTIN along with cancellation and refund terms. A fast, mobile-friendly website is essential, as most customers compare options on their phones.

Once the foundation is in place, focus on marketing. A mix of online and offline channels works best.

• Digital channels: SEO for consistent traffic, social media for visibility, blogs or travel guides for authority, and paid ads for quicker reach.
• Offline channels: Local events, printed brochures, and referral networks still matter in many locations.

While promoting packages, avoid unclear pricing or exaggerated claims. Consumer protection laws require transparent communication on costs, inclusions, and exclusions. Start with simple offers and prioritise trust. In travel, credibility brings repeat business faster than aggressive promotion.

When you start promoting your agency, it helps to secure your brand name before it gains visibility. Travel and transport services fall under Trademark Class 39, which covers most activities offered by travel agencies. You can read a simple explanation of this classification here: Trademark Class 39: Travel, Parcel & Transport Services

Conclusion

Starting a travel business in India takes more than enthusiasm. It calls for a steady plan, the right legal groundwork, and a fair amount of careful effort. The industry continues to grow, though competition comes in all sizes. Agencies that do well usually stay compliant, price their services sensibly, and earn their clients’ trust from the start.

Most early mistakes come from legal slip-ups, such as choosing the wrong GST route, issuing incorrect invoices, or confusing the duties of a travel agent with those of a tour operator. Once these basics are sorted, the rest of the operation tends to move with fewer bumps.

If you want help with business registration, GST registration, licensing, or choosing the right structure for your travel agency, our team at LegalWiz can guide you and keep your setup compliant from day one.