Government rules for setting up a

travel agency/ tour operation

business !!!

The aims and objectives of the scheme for recognition of Travel Agent / Agency (TA)
are to encourage quality standard and service in this category so as to promote tourism
in India. This is a voluntary scheme open to all bonafide travel agencies to bring them
in organized sector.
The application for approval shall be addressed to the assistant Director General,
Travel Trade Division, Ministry of Tourism, Government of India.
The inspection for first approval/renewal or extension shall be conducted by the
Inspection team within a period of 60 working days from the reciep of the complete
application.
TA would be required to pay a non-refundable fee of Rs.3, 000/- while
applying for the recognition and renewal of Head Office as well as each Branch
Office. The fee would be payable to the Pay and Accounts Officer, Ministry of
Tourism, in the form of a Bank Draft.

Conditions to be fulfilled by TA for

recognition :

1] The application for grant of recognition /

renewal or extension shall be in the prescribed
form and submitted in duplicate along with the
required documents.

2] TA should have a minimum Paid up Capital

(Capital employed) of Rs. 3.00 lakh for rest of
India and Rs. 50, 000/- for the agencies located
in the North Eastern region, remote and rural
areas duly supported by the latest audited
Balance Sheet / firms Statutory Auditors
certificate.

3] TA should have been in operation for a

minimum period of one year before the date
of application.

4] Infrastructural and financial requirements

The requirement for this regard includes the following investments :
Buying or hiring office space
Office furniture and furnishing
Communication equipments [xerox, fax, telephone, computers]
Salaries for the staff
Office materials [files, promotional brochures etc]
According to MoT, The minimum office space should be at least 150 sq. ft for
rest of India and 100 sq. ft for hilly areas which are above 1000 meters from
sea level. Besides, the office may be located in a neat and clean surrounding
and equipped with telephone, fax and computer reservation system etc.
There should be sufficient space for reception and easy access to toilet
facilities.

5] Skill requirements :
TA should be under the charge of the Owner or a full time member who is
adequately trained, experienced in matters regarding ticketing, itineraries,
transport, accommodation facilities, currency, customs regulations and
tourism and travel related services. Besides this, greater emphasis may be
given to effective communication skills, knowledge of foreign languages,
other than English.
There should be a minimum of four qualified staff out of which at least
one should have Diploma / Degree in Tourism & Travel Management from a
recognized University, IITTM or an institution approved by AICTE. The owner
of the firm would be included as one of the qualified employees.
The academic qualifications may be relaxed in case of the other two staff
members who are exceptionally experienced personnel in Airlines, Shipping,
Transport and PR agencies, Hotel and other Corporate Bodies and those who
have worked for three years with IATA / UFTA agencies and also those who
have two years experience with MOT approved Travel Agencies.

For the Travel Agents / Agencies located in the North Eastern region,
remote and rural areas, there should be a minimum of two staff out of
which one should be a qualified employee with a Diploma / Degree in
Tourism & Travel Management from a recognized University, IITTM or an
institution approved by AICTE. The owner of the firm would be included as
one of the qualified employees.

6] TA should be approved by International Air

Transport Association (IATA) or should be
General Sales Agent (GSA) / Passenger Sales
Agent (PSA) of an IATA member Airlines.

A travel agency requires certain approvals for carrying the business and in this
regard an approval from the International Air Transport Association (IATA) which is
the World Organisation of Scheduled Airlines, is very useful. IATA has worked out
International fares and rates and uniform transportation documents (airline tickets
and airway bills) to facilitate the carriage of passengers and cargo world-wide. An
IATA approved Passenger Sales Agent is an Agent who is capable of receiving
commissions on International Air Travel documents. This commission is paid only to
approved Agents.
To apply for IATA approval, an application has to be submitted, by filling out the
requisite forms, and sent to Sedentary, Agency Investigation, Panel No. 9(AIP-9). In
this regard the following aspects are checked:
Ability to generate and procure air passenger transportation,
Professional standing,
Financial status,
Business premises,
Staff ability and experience
A final inspection is held and the approval is given by IATA. It is worth mentioning
here that a IATA Agents get 9% commission on International air tickets and 6% on
domestic airline tickets.

7] TA should be an income-tax assessee and

should have filed Income Tax Return for the
current assessment year.

8] For the monuments protected under the Ancient

Monuments and Archaeological Sites & Remains Act,
1958 (24 of 1958), the TAs should deploy / engage
the services of Regional Level Tourist Guides trained
and licensed by Ministry of Tourism, Government of
India or other guides authorized by the Government
of India or under orders of the Honble Court(s). For
other monuments and destinations, the guides
authorized under the orders of the appropriate
authority, if any, of the concerned monument /
destination should be deployed / engaged by TAs.

9] For outsourcing any of the services relating

to tourists,the TA(s)shall use approved
specialized agencies in the specific field of
activity.

10] In order to receive and deposit foreign

exchange earned, with a Bank the agency
should have a Restricted Money Changers
Licence (RLM-3) and proper returns must be
filed with the Reserve Bank of India every
fortnight.

11] The Government of India gives certain

incentives and benefits to the tourism industry and
a person intending to set up a travel agency should
be aware of such benefits.
For example:
Under this 50% of earning profits in foreign exchange are free of income tax and the other
50% are also tax free if they are ploughed hack into the development of tourism.

The Department of Tourism gives prizes for various categories of travel agencies for foreign
exchange earnings.
The Tourism Finance Corporation of India gives loans to persons for setting up travel
agencies. The Department of Tourism, Government of India provides brochures, tourism
related data, etc. to travel agencies for promotional purposes.
The Department of Tourism, Government of India also provides assistance to the travel
agencies for participation in tourism fairs, travel marts, and in official promotional
delegations. Generally such assistance is provided through the Travel Agents Association of
India (TAAI) and it is advisable that travel agencies should become members of TAAI

Thank You
-Mukul
Chaudhary and
Era Sood