A travel agent prices a DMC tour package in three steps: take the DMC’s net rate, add your margin on top, then apply GST the right way for how you invoice the client. The net rate is the ground cost with no commission built in. Your margin is the only profit on the booking, so work it out as a share of the selling price, not as a percentage added to the net, or you will earn less than you think. GST on an Indian tour package is usually 5% on the gross amount without input tax credit, or 18% with it. Get these three right and every quote you send is both competitive and profitable.
This guide is for travel agents and tour operators buying ground from a destination management company for Himachal, Kashmir, Ladakh, Uttarakhand or anywhere else in India. If the DMC model itself is new to you, read what a DMC is and how agents choose one first. This piece is about the money: what a net rate should contain, the markup arithmetic, the GST choice, and the line items that quietly eat your margin.
What is the difference between a net rate and a commissionable rate?
Suppliers sell to the trade in two ways, and you need to know which one you are being offered before you compare quotes.
- Net rate. The DMC quotes the cost of the ground — hotels, vehicle, driver, sightseeing as specified — with nothing added for you. You set the selling price. Whatever you add is your income. This is how almost every DMC in India works with agents.
- Commissionable rate. The supplier quotes a public selling price and pays you a percentage back, either deducted on the invoice or paid later. Hotels selling direct and online platforms often work this way. Your income is capped by their price, and you cannot undercut it without giving away your commission.
Net rates give you control. You can price a Shimla–Manali family trip at a thin margin to win a price-sensitive client, and price a honeymoon with upgrades at a fatter one. With a commissionable rate, you are selling someone else’s price list. The catch with net rates is that the arithmetic is now your job, and that is where most agents leak money.
What should a DMC net rate include?
A net rate is only useful if you know exactly what is inside it. Two DMCs quoting the same figure can be selling very different trips. Before you compare, check that the quote lists each of these in writing:
| Component | What the quote should say | Why it matters |
|---|---|---|
| Hotels | Named property, room category, meal plan (EP/CP/MAP/AP) | “Or similar” lets the cheaper hotel slip in after you have sold the better one |
| Vehicle | Vehicle type, AC policy in the hills, km or point-to-point basis | A Dzire, an Innova Crysta and a Tempo Traveller are different trips for a family of six |
| Driver costs | Driver allowance, night charges, food and stay included or not | The most common “extra” a client is asked to pay on the road |
| Tolls, parking, state taxes | Included or extra, line by line | Hill states charge entry tax on out-of-state vehicles |
| Permits and local transport | Rohtang permit, inner-line permits, local union taxi sectors | Some sectors cannot be driven by the main vehicle at all |
| GST | Rate (5% or 18%) and shown separately | Changes your landed cost and your own tax position |
| Validity | Travel dates the rate is good for, and blackout dates | Christmas–New Year and long weekends are priced separately almost everywhere |
Himachal is a good example of why the small lines matter. A Delhi-registered cab entering the state pays entry tax at the border, the Rohtang Pass needs a separate online permit with a daily cap, and in winter the road beyond Solang is often run by local vehicles. Our guide to Himachal entry tax, permits and the 2026 rules covers each of these. If a quote is silent on them, assume your client will be asked for the money on the road, and that the complaint will come to you.
What is the difference between markup and margin on a tour package?
Markup and margin sound like the same thing. They are not, and confusing them is the single most common pricing mistake in small agencies.
- Markup is what you add as a percentage of the net cost.
- Margin is what you keep as a percentage of the selling price.
If you want to keep 15% of what the client pays, adding 15% to the net will not get you there. The table below uses a round example figure of ₹1,00,000 net. It is an illustration of the maths, not a quote for any trip.
| Method | Selling price (before GST) | Your income | Real margin on sale |
|---|---|---|---|
| Add 10% markup | ₹1,10,000 | ₹10,000 | 9.1% |
| Add 15% markup | ₹1,15,000 | ₹15,000 | 13.0% |
| Target 15% margin (net ÷ 0.85) | ₹1,17,647 | ₹17,647 | 15.0% |
| Target 20% margin (net ÷ 0.80) | ₹1,25,000 | ₹25,000 | 20.0% |
The rule is simple: selling price = net ÷ (1 − target margin). Decide the margin you need to cover your office, your marketing and the client who cancels late, then price from that. Never price by adding a round percentage and hoping it works out.
How much margin is normal?
There is no fixed industry figure, and anyone who quotes you one is guessing. What sets your margin is how much work the booking takes and how easily the client can compare it. A standard Shimla–Manali circuit that clients price-check on three websites will carry a thin margin. A custom Spiti road trip, a multi-state honeymoon or a 40-person corporate offsite carries more, because the planning is the product and nobody can compare it line for line. Price the effort, not the destination.
Is GST on a tour package 5% or 18%?
In India, a tour operator selling a package under SAC 998552 has two options. Both are legal. They lead to different landed costs.
- 5% on the gross amount, without input tax credit. The invoice must say the amount is a gross figure that includes the charges for accommodation and transportation. The operator cannot claim credit for GST paid on hotels, cabs and other inputs. There is one important exception: credit on tour operator services bought from another tour operator is allowed.
- 18% with input tax credit. The operator charges 18% and claims credit for GST paid on eligible inputs.
That exception is what makes the DMC chain work. If your DMC bills you at 5% as a tour operator, and you sell the package to your client at 5% as a tour operator, you can generally offset the GST the DMC charged you against the GST you collect. You pay tax only on your own margin, not twice on the whole trip. Ask your DMC to confirm their invoice is raised as tour operator service, and ask your CA to confirm the credit treatment for your registration before you rely on it.
Two more points from the current rules:
- Hotels. Since the GST rate changes of 22 September 2025, hotel rooms with a tariff up to ₹7,500 a night are taxed at 5% without input tax credit, down from 12%. Rooms above ₹7,500 stay at 18%. If your DMC breaks hotel cost out separately, this is why the tax on mid-range rooms looks lower than it did last year.
- TCS is for overseas packages only. Tax collected at source under the income tax rules applies to overseas tour packages, and Budget 2026 cut it to a flat 2%. Domestic packages to Himachal, Kashmir or Goa do not attract TCS. If a supplier adds TCS to a domestic quote, question it.
GST rules change by notification, so treat this as orientation, not tax advice. Your CA should sign off on how you invoice.
How long is a DMC net rate valid, and what are blackout dates?
A net rate has a shelf life. Hotels in the hills move their rates by season, and the DMC’s rate moves with them. When you receive a quote, check three things:
- The travel window. A rate valid “till 15 December” does not cover a client travelling on 20 December, even if they booked in November.
- Blackout and surcharge dates. Christmas–New Year in Manali and Shimla, Diwali week, and long weekends are priced separately in most hill hotels. Some add a compulsory gala dinner on 31 December.
- How long the quote is held. Hotel rates are usually confirmed only on payment. If your client takes a week to decide in peak season, the rooms may be gone or repriced.
For the 2026–27 winter specifically, our B2B guide to selling Himachal in winter covers rate seasons, rooming and the snow-dependent parts of a winter itinerary.
How does FIT pricing differ from group pricing?
FIT (individual travellers, usually two to six people) and group pricing work differently. For an FIT, the vehicle is a fixed cost shared by fewer people, so it is a large share of the per-person price. Adding a third or fourth traveller to the same cab often drops the per-person cost sharply. For a group, the hotel block and the move to larger vehicles drive the price, and a DMC can negotiate room rates that FIT bookings never get. If you run fixed departures, ask for a per-person net rate across a range of group sizes, so you can sell a brochure price without requoting every batch.
Which six margin leaks should an agent check before sending a quote?
- Driver allowance and night charges not in the net rate, so the client pays the driver in cash and thinks you hid it.
- Entry tax and parking left out, which looks small on paper and very large to a client at a toll barrier.
- Local taxi sectors at Solang, Gulmarg or Pahalgam assumed to be in the vehicle cost when they are not.
- Meal plan mismatch: you sold MAP and the hotel was booked on CP.
- GST charged twice, because you invoiced 18% on a package the DMC billed at 5% without checking the credit position.
- Cancellation terms that differ between your client contract and your DMC contract, which leaves you paying the gap.
A good DMC hands you a quote where every one of these is already answered in writing. That is the real difference between a local ground operator and an aggregator reselling someone else’s inventory: the aggregator gives you a price, the operator gives you a price you can stand behind on the road. It is also what agents tell us they value in our Himachal DMC ground-handling desk.
Frequently asked questions
What is a net rate in travel?
A net rate is the price a supplier charges a travel agent for the ground arrangements, with no commission or retail markup included. The agent adds their own margin on top and sells the trip to the client at a price the agent sets.
How do I calculate the selling price of a tour package from the net rate?
Divide the net rate by one minus your target margin. For a 15% margin, divide the net by 0.85. Adding 15% to the net only gives you about 13% of the selling price.
What GST does a DMC charge a travel agent in India?
Usually 5% on the gross package value without input tax credit, or 18% with input tax credit, under SAC 998552. Ask which one before you contract and make sure it is shown separately on the invoice.
Can I claim the GST my DMC charges me?
Under the 5% tour operator scheme, credit on tour operator services bought from another tour operator is generally allowed, so you can usually offset the DMC’s GST against the GST you charge your client. Confirm the treatment for your registration with your CA.
Is TCS charged on domestic tour packages?
No. TCS applies to overseas tour packages, now at a flat 2% after Budget 2026. A domestic package to Himachal, Kashmir, Ladakh or Goa does not attract TCS.
Do DMCs pay commission to travel agents?
Most do not. They quote net rates and the agent keeps the difference between the net and the selling price. Commissionable rates are more common with hotels selling direct and with online platforms.
Get a net rate sheet you can sell from
Suzu Travels is a Himachal Pradesh–based DMC in Ghumarwin, District Bilaspur, founded in 2019, registered as a travel agent with the Department of Tourism & Civil Aviation, Government of Himachal Pradesh (Reg. No. DTO-MND-11-243/2022 — see the certificates), and GST-registered since January 2021. We work with agents across Himachal, Kashmir, Ladakh, Uttarakhand and beyond on net rates, with every line item above spelled out on the quote, a GST invoice to your business, and no contact with your client outside the trip. Our standard circuits, such as the Shimla–Manali tour package, are a good base to white-label.
Send your dates, pax count, hotel category and route, and we will come back with an itemised net rate. Send the brief through our costed-itinerary enquiry form, or call or WhatsApp +91 70874 88961 and ask for the agent desk.
