Last updated: December 2nd, 2024 8:13 PM

Starting a Travel Agency Business in India

Travel and tourism industry is one of the largest industries in India and very significant employment generators. According to the UN's World Tourism Organization (UNWTO), the travel and tourism industry provides 6-7 per cent of the world's total jobs directly and much more indirectly through the multiplier effect. The travel and tourism industry in India is ranked 12th among 184 countries in terms of GDP contribution and the tourism industry in India is set to grow at 7.8% per year during 2013-2023. The travel and tourism market in India estimated at USD117.7 billion in 2011 is estimated to boom to USD418.9 billion by the year 2022, and so there is plenty of opportunity for new entrepreneurs starting in the travel and tourism industry as travel agents. In this article, we look at the rules, regulations and taxation issues for starting a travel agency business in India.

Choice of Business Entity

Travel agents today have many options of business entity to choose from and the business plan for the venture would play a major role in finding the right fit. Most travel agents choose to have a Private Limited Company as it is one of the most widely used and recognised forms of business in India, offering a host of benefits. A private limited company is definitely a must for entrepreneurs who have plans to offer their services online and quickly scale up their business - using the power of the internet. On the other hand, newly introduced business entities like Limited Liability Partnership (LLP) or One Person Company (OPC) would be ideal for entrepreneurs who have plans to slowly build the business and/or do it on a part-time basis. As Limited Liability partnerships have no requirement for audit unless the turnover exceeds Rs.40 lakhs in a year, it would be ideal for entrepreneurs who are getting their first-hand experience in their venture. On the other hand, OPCs act ideal for entrepreneurs who are establishing their business as a single individual who wants to avoid having extensive compliance requirements to follow. Either way, a business entity offering limited liability status and separate legal entity status act ideal for a travel agent.

Entrepreneurs can also opt for proprietorship's with a trademark, in cases where the entrepreneur wants to have a unique brand name, that is unavailable to get the registration with Ministry of Company Affairs - due to the naming guidelines.

Becoming a Government of India approved Travel Agent

Though registration as a Government of India approved Travel Agent is not mandatory, it is beneficial and provides recognition for the travel agent. The aim and objective of the scheme for recognition of Travel Agent / Agency (TA) are to encourage quality standard and service in this tourism industry. For becoming a Government of India recognised travel agent, the travel agent must satisfy the certain requirement on capital invested, staff employed, maintenance of minimum office space and other stipulations. Further, make an application to the Ministry of tourism in the correct format to become a Government of India approved Travel Agent.

Guidelines for becoming Government of India approved Travel Agent

Becoming an IATA Agent

The International Air Transport Association (IATA) is the trade association for the world’s airlines, representing some 240 airlines or 84% of total air traffic. IATA offers comprehensive training and professional development services for travel agents, and IATA accreditation is a very important seal of approval recognised worldwide. Therefore, it is important for the travel agent to consider becoming IATA members, and enjoy access to a range of tools and benefits.

IATA Travel Agent Application Guide India

IATA Travel Agent Application India

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