FININ2MIN · BUSINESS PLAYBOOKS · PCJ-13
Travel Agency & Tour Operator
Practical India guide to Travel Agency & Tour Operator: approvals, setup, operating controls, taxes, cash flow, risks, closure, 28 FAQs and editable tools.
General business education. Use the activity, location and transaction facts for legal and tax decisions; illustrative figures are not promised returns.
The two-minute answer
First decision — Air tickets sold as agent. Distinguish supplier fare from agent fee and taxable treatment; contract and bill in the capacity actually held. Second decision — International holiday package. Check overseas supplier terms, FEMA remittance, passports/visas, place-of-supply and source jurisdiction compliance. Then execute — Define intermediary versus principal role. State whether business acts as agent, tour organiser/principal, ticket reseller, DMC, outbound travel seller or visa assistance provider. This changes invoice, responsibility, GST, customer refunds and supplier risk. Know the first escalation — Hotel or airline cancels unexpectedly. Contact customers, present verified alternative/refund rights and record accepted option; preserve supplier communications and booking confirmations. Save a dated licence/authority determination, responsible owner, signed contract, evidence reference and next review date at every material step. This is the minimum practical answer before committing capital or promising a customer outcome.
Choose your exact model before applying
| Operating model | How it changes compliance | Minimum evidence |
|---|---|---|
| Ticketing intermediary | Agency commission, customer funds and supplier refund rules must be separated. | Supplier credentials, booking/commission log |
| Domestic tour organiser | Transport, hotel, safety and package performance are organiser risks. | Itinerary, subcontractor licences and refund terms |
| Outbound/adventure tour | Foreign suppliers, safety plans, overseas tax and remittance rules need special review. | Destination risk, partner and foreign-currency documents |
Six practical steps — registration to operation
Map agency versus principal role
Identify whether bookings are made as disclosed agent for airlines/hotels or as organiser of a combined trip. Who contracts with customer, invoices total fare, receives payment and refunds failed journeys affects GST, consumer duty and revenue recognition.
Establish credible supplier control
Verify airline/GDS affiliations, hotel contracts, vehicle/operator permissions, travel insurance options and destination partners. Ministry of Tourism recognition may enhance credibility but is voluntary; do not misstate recognition as a nationally compulsory travel agency licence.
Disclose trip conditions at booking
Provide itinerary, inclusions, exclusions, room class, passenger identity conditions, visa responsibilities, weather/force-majeure assumptions, foreign exchange basis and exact cancellation/refund ladder. Maintain booking confirmations and an emergency point of contact.
Control permits, passenger safety and payment
For tourist transportation, verify vehicle and driver permissions; for adventure excursions inspect insurance, local safety rules and competent guides. Track customer deposits separately from obligations to pay hotels and carriers.
Analyse GST and cross-border tax
Differentiate pure ticketing commission from tour services/packages, domestic/foreign supply, hotel/transport inputs and foreign travel-specific taxation. Check current notification and transaction dates; do not quote one GST rate or TCS percentage across all package models.
Build refund and working-capital stress
Test cancellations after non-refundable supplier advances, exchange-rate rises, airline schedule changes and card chargebacks. Monitor gross booking value, actual agency fee income, supplier payables and recoverable credits separately.
Regulatory applicability and authority matrix
| Statute / regulator | What triggers it | What to verify | Keep on file |
|---|---|---|---|
| Consumer contracts / tourism recognition | Travel information, truthful package claims and voluntary recognition rules. | Give precise written booking/refund terms. | Itinerary and customer contract |
| Transport / destination sector rules | Own vehicles, adventure activities and local operating permissions. | Verify each subcontractor or own permit. | Operator contracts and permissions |
| GST, TCS, FEMA when applicable | Agency commission vs principal package, outward remittances. | Classify supply and check international financial controls. | Tax invoices, supplier and remittance records |
| Personal data / DPDP phases | Passport, contact, travel and payment details. | Restrict sharing and retention to booking needs. | Customer consent and processing terms |
GST, income tax and cash-recognition decisions
| Transaction / obligation | Assessment and treatment |
|---|---|
| Agency commission | Tax the actual intermediary service after checking place-of-supply and rate. |
| Tour sold as principal | Principal/package gross supply may differ from agent net commission. |
| International travel | Apply relevant foreign remittance/tax provisions by product/date. |
| Refunds | Recognise supplier credits and customer obligations separately. |
Forms, registers and evidence checklist
| Document / record | What to include | Owner / authority |
|---|---|---|
| Agency | Supplier and accreditation/recognition evidence if claimed | Supplier register |
| Customer | Booking forms, itinerary, cancellation policy and invoice | CRM |
| Sector | Permit/safety/insurance details of transport and adventure partners | Trip control file |
| Money | Supplier advances, customer funds and refunds | Settlement ledger |
| Privacy | Passport data sharing and retention controls | Access register |
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Financial model: revenue, profit and cash are different
| Input or result | Value | Meaning |
|---|---|---|
| Monthly volume | 160 completed bookings | Retained, accepted or billable output—not merely enquiries/dispatches |
| Realised price | ₹6,200 | Net of refunds and indirect tax |
| Variable cost per unit | ₹2,450 | Direct cash costs allocated to the same billable unit |
| Fixed operating cash cost | ₹405,000 | Excludes depreciation, finance charges and income tax |
| Contribution per unit | ₹3,750 | Price minus variable unit cost |
| Break-even volume | 108 completed bookings | Fixed cost ÷ contribution, rounded up |
| Capacity utilisation | 61.5% | Volume ÷ illustrative safe/saleable capacity |
Worked calculation: 160 × (₹6,200 − ₹2,450) = ₹600,000 contribution; less ₹405,000 fixed cash costs leaves ₹195,000 before financing, depreciation, tax and capital expenditure. A 10% fall in volume alone reduces contribution by ₹60,000. A 10% rise in unit variable cost alone reduces it by ₹39,200.
This is an agency-fee/commission model. Gross client travel collections and amounts owed to hotels, airlines or principals are not assumed to be agency revenue.
A customer advance may already be committed to a supplier
A tour organiser collects advance payments and sees a healthy bank balance. Airline and hotel deposits are non-refundable, foreign-currency rates move, and customer cancellation terms do not match the supplier contracts.
Work through the decision
Prepare a booking-level cash map identifying customer receipts, supplier deposits, balance dates, cancellation deadlines and currency exposure. Separate the organiser’s margin from money committed to third-party travel. Confirm who supplies each element and who bears refunds, visa refusal, itinerary changes and emergency assistance.
What to establish before proceeding
Publish a booking-specific cancellation schedule that reflects the actual contractual position without removing mandatory consumer remedies. Reserve for cancellations and supplier failure. Programme recognition, where relevant, is not a substitute for the local and activity-specific permissions.
| Operating measure | Definition and use |
|---|---|
| Booking cash available | Customer receipts less supplier commitments and refund exposure, not the total travel account balance. |
| Supplier confirmation coverage | Paid itinerary components backed by valid supplier confirmations and matching dates/names. |
| Cancellation margin leakage | Lost deposits and unrecovered costs on cancellations measured against the original booking contribution. |
This example is Finin2min’s operating analysis. Its commercial assumptions are not quoted market terms or a permit determination.
Common mistakes and how to avoid them
- Calling voluntary tourism recognition a legal licence. It is not a universal mandatory requirement.
- Confusing gross bookings with earned fees. A pure agent’s revenue differs from customer funds handled.
- No written refund waterfall. Supplier terms can expose the operator to uncovered refunds.
- Sharing passport scans indiscriminately. Sensitive identification should be minimised and controlled.
Practical 30/60/90-day implementation plan
| Period | Specific milestone |
|---|---|
| Days 1–30 | Select package/agency roles and document supplier terms, consumer disclosures and required local activity checks. |
| Days 31–60 | Test booking confirmation, payments, cancellations and emergency-contact processes on a limited itinerary. |
| Days 61–90 | Review itinerary-level margin, refunds and currency cash exposure before increasing prepaid booking volume. |
Your launch readiness checklist
0 of 10 launch tasks marked done (this page only)
Which business model changes the legal answer?
| Situation | Exact action and proof of decision |
|---|---|
| Air tickets sold as agent | Distinguish supplier fare from agent fee and taxable treatment; contract and bill in the capacity actually held. |
| International holiday package | Check overseas supplier terms, FEMA remittance, passports/visas, place-of-supply and source jurisdiction compliance. |
| Pilgrimage or adventure activities | Destination-specific permissions, medical fitness, vendor safety and emergency evacuation needs may be higher. |
| Foreign hotel booking only | Determine actual supplier/customer location, invoice and GST place of supply rather than automatically treating it as exempt. |
| School group tour | Child supervision, parent authorisation, staff checks, transport and emergency communication controls need special protocols. |
| Trip cancelled by supplier | Customer contract and supplier refunds may differ; disclose rights, cashflow and dates before offering credits. |
Complete execution SOP: what to do, in order
Define intermediary versus principal role
State whether business acts as agent, tour organiser/principal, ticket reseller, DMC, outbound travel seller or visa assistance provider. This changes invoice, responsibility, GST, customer refunds and supplier risk.
Verify products and official recognition claims
Tourism ministry recognition, IATA accreditation, visa consultancy and State travel registration can have different status or be voluntary/mandatory depending on activity and jurisdiction; do not claim accreditation not held.
Screen trip contracts and traveller needs
Collect itinerary, passport/visa requirements, cancellation, special needs, child travel, insurance, forex rules, local permits and supplier refund schedule before accepting payment.
Trace receipts and third-party settlements
Record travel consideration, agency commission/markup, pass-through airline/hotel money, credit card chargebacks, overseas supplier remittances and customer refunds separately.
Decide taxes for each travel component
Classify flights, hotels, package tours, foreign travel services, visa facilitation, insurance, TCS or other remittance treatment where applicable; use current GST and income-tax provisions rather than one universal package rate.
Operate traveller safety and 24/7 assistance
Provide emergency contact, destination advisory, vendor proof, rescue/medical escalation, traveller consent to information sharing and dispute resolution.
Measure cancellations and supplier credit
Track refund turnaround, unused vouchers, due-to-suppliers, exchange exposure, complaint ageing and earned fees after costs/chargebacks.
What to do when something goes wrong
| Real-world problem | Action, evidence and remedy |
|---|---|
| Hotel or airline cancels unexpectedly | Contact customers, present verified alternative/refund rights and record accepted option; preserve supplier communications and booking confirmations. |
| Traveller medical emergency | Activate destination emergency/insurer instructions, contact authorised persons and keep consent and expense evidence. |
| Visa rejection | Use signed terms identifying that government decision is independent, calculate only legitimate non-refundable fees and provide supporting documents. |
| Foreign vendor fails to refund | Create payable/receivable trail, initiate contractual dispute with carrier/supplier and disclose customer status with documentary proof. |
| Payment sent to fraudulent booking agent | Freeze/trace payments, preserve communications, notify bank/law enforcement where appropriate and implement counterparty KYC checks. |
Contract clauses and counterparty safeguards
- Distinguish whether contracting as agent or principal operator
- List confirmed itinerary, inclusions, exclusions and travel-document responsibility
- State supplier cancellation schedule, refund and forex conversion methodology
- Provide emergency assistance, insurance terms and incident reporting
- Clarify customer data sharing with airlines, hotels and overseas providers
Operational templates, registers and checklists
- Licence/approval applicability and filing tracker (CSV)
- Business-specific operational register (CSV)
- Incident response and corrective actions (CSV)
- Commercial terms and contract negotiation checklist (CSV)
- 12-month compliance review calendar (CSV)
- Question/answer and evidence bank (CSV)
- Official forms and documents vault index (CSV)
Stress tests, funding and month-end finance
| Stress / funding item | Illustrative result | Decision |
|---|---|---|
| Volume −20% and unit cost +10% | ₹43,640 monthly operating result | Reduce avoidable fixed costs, reprice or improve retained volume before adding debt |
| An extra 30 days of collection delay | ₹992,000 additional receivables | Profit is unchanged initially, but cash is locked up |
| Startup equipment cash | ₹600,000 | Separate capital expenditure from operating cost |
| Refundable lease deposit | ₹200,000 | Not an ordinary monthly expense |
| Opening liquidity buffer | ₹1,200,000 | A planning assumption—not proof the business is adequately funded |
Financing decision
Law, effective date and applicable authority
Direct tax: use the correct year and law
Official reading: CBDT — Income-tax Act, 2025 commencement
Labour: commencement and operating rules are separate checks
Official reading: Ministry of Labour — four Labour Codes commencement
GST: classification, notification and date
Official reading: CBIC tax-information repository · Ministry of Finance — 56th GST Council FAQ
Personal data: staged commencement
Official reading: Gazette — DPDP Act phased commencement, G.S.R. 843(E)
Commercial and legal decisions before spending
Separate agency income from a principal tour package
An agent arranging third-party transport/hotels earns a fee or commission; a principal selling a package may have different revenue, tax and performance obligations. Document who contracts with the traveller and bears cancellation, supplier failure and delivery risk. Gross booking value is not automatically the agent’s revenue. The sample model is an agency/service-fee model, not a full principal package P&L.
Protect customer advances and cancellation liquidity
Maintain booking-level customer collections, supplier commitments, refundable amounts, currency and service dates. Do not spend refundable travel advances as unrestricted working capital. Keep a reserve based on the cancellation exposure and supplier refund lag. Match customer cancellation terms to supplier terms and transparently disclose unavoidable non-refundable charges before payment.
Control trip execution and emergency escalation
Verify suppliers and transport/guide credentials relevant to the activity and location. Send a clear itinerary, inclusions, exclusions, visa/passport responsibilities, emergency contacts and material risk information. Adventure activities need activity-specific competent operators, safety and insurance analysis, not just a general travel-agency contract. Have a documented response for missed connections, hospitalisation, natural disruption and supplier insolvency.
Price currency and tax cash separately
Use dated supplier quotes, exchange-rate assumptions and a validity window. Overseas tours can involve collection and remittance rules different from a domestic agency fee; identify the current tax year and operative provisions rather than using a remembered TCS table. Show any customer tax collection as a liability/credit record, not profit. Reconcile gross supplier payments, commission, mark-up and refunds at booking closure.
Official reading: Ministry of Tourism · CBIC tax-information repository · CBDT — Income-tax Act, 2025 commencement · Department of Consumer Affairs · DGFT — IEC, foreign-trade policy, ITC(HS), SCOMET and eBRC
Approvals: authority, process and completion evidence
Travel business and premises
Authority: State/local authorities; Ministry of Tourism where relevant
Process: Check business registrations and any State travel/adventure requirements. Treat optional recognition/empanelment and statutory permission as different categories.
Completion evidence: Applicable registration and approved scope; supplier eligibility records.
Supplier and ticketing relationships
Authority: Airline/aggregator/hotel/transport supplier
Process: Complete commercial accreditation or agency arrangements where required by the supplier; document payment security, ticket issuance and cancellation rights.
Completion evidence: Executed agreements, authorised access and supplier confirmation.
Overseas booking and funds
Authority: Authorised dealer bank / income-tax framework
Process: Identify whether acting as agent or principal, foreign remittance purpose and the applicable collection/withholding requirements for the year.
Completion evidence: Booking-specific tax/remittance working and official payment evidence.
Customer contract and claims
Authority: Consumer framework / insurer
Process: Disclose supplier identity, itinerary, total price, cancellation, visa limitations and complaint/emergency route before payment.
Completion evidence: Accepted terms, booking confirmations, claim and refund trail.
Application passport: from eligibility to approval
Permissions, prescribed forms, fees and professional review
Voluntary OTA scheme
Facts that determine applicability: Apply this branch only to a business choosing Ministry approval as an online travel aggregator.
Competent authority: Ministry of Tourism; current NIDHI-linked application route
Application and prescribed form: Official OTA guideline contains Annexures I–VII: undertakings, affidavits, pledges and checklist. Recognition does not replace other licences.
Fees and funding: The linked guideline states a non-refundable Rs 25,000 approval/re-approval fee. Confirm current scheme/portal demand; do not apply it to every travel agent.
Completion evidence: Eligibility, audited capital/operating evidence, prescribed annexures, inspection, payment and approval.
Question for the relevant professional: Is the entity an OTA eligible for this voluntary scheme, and are current scheme conditions met?
Tours, vehicles and destination permissions
Facts that determine applicability: Record own vehicles versus subcontracting, destinations and adventure/protected-area activities.
Competent authority: Relevant State transport, tourism and destination authorities
Application and prescribed form: Assess vehicle permits and any location/activity-specific permission separately from tourism recognition.
Fees and funding: State vehicle/activity fees, entry tickets, taxes and supplier prices are distinct from central recognition charges.
Completion evidence: Operator/vehicle approvals, contracts, itinerary risk assessment and applicable destination permits.
Question for the relevant professional: Which operator is responsible for each regulated activity and do permits match the actual itinerary?
Customer money and cancellation terms
Facts that determine applicability: Identify agency versus principal role, booking confirmations, foreign travel and refund exposure.
Competent authority: Consumer authorities; tax/FEMA authorities as applicable
Application and prescribed form: Disclose supplier/agent role, itinerary, exclusions, cancellation allocation and grievance process.
Fees and funding: Customer advances are not unrestricted profit; map supplier commitments, taxes and refund reserves.
Completion evidence: Signed terms, supplier confirmations, receipt/settlement trails, insurance and incident arrangements.
Question for the relevant professional: Who owes performance/refund and what obligations arise from cross-border collections?
Prepare the decision file
Daily controls, review rhythm and escalation
Daily: booking confirmations, travel-date exceptions, client advances and supplier payment deadlines.
Weekly: cancellation/refund ageing, foreign-currency exposure, ticketing debit notes and supplier risk.
Monthly: earned commissions versus gross bookings, tax collections, customer-money coverage and seasonal cash forecast.
Respond to an incident without destroying evidence
Exit, sale, closure and continuing liabilities
Close or transfer future bookings with explicit responsibility and customer communication before ceasing operations. Reconcile refunds and supplier credits, preserve travel records securely and revoke ticketing access. Selling the agency database does not automatically transfer contracts, visas or travellers’ consent.
Closing evidence and liabilities
Business-specific questions answered
Is Ministry of Tourism recognition mandatory?
The official recognition scheme is voluntary; other activity-specific local or sector permissions may still apply.
Are travel ticket sales always taxed on gross fare?
Depends on whether the business acts as principal or agent and applicable rules.
Can a travel agent promise every visa approval?
Visa decisions belong to relevant authorities; promises must be truthful.
What is a key solvency test?
Cash held for future departures less supplier payments due and refundable customer claims.
The answers below address common real-world situations. Each must still be matched to the operator’s actual facts, current tax notification and State/local rules.
Is Ministry of Tourism recognition compulsory for every travel agent?
Do not equate voluntary recognition/accreditation with statutory local or sector registrations. Check the exact business, State and advertised recognition claim.
Does IATA accreditation replace a legal licence?
No. Accreditation is an industry commercial credential, not a substitute for GST, consumer, local or other statutory authorisation.
Who owns the airline refund if ticket sold through my agency?
The ticket/fare rules, airline and agency contract and consumer obligations control. Keep original fare, service fee and refund ledger separated.
Should a travel package quotation be itemised?
Provide itinerary, inclusions/exclusions, taxes, supplier constraints, payment stages, cancellation/visa risks and contact points to prevent disputes.
Are international packages always GST-free?
No. Principal/agent role, place of supply, tour composition and current notifications are determinative.
Can I collect foreign currency or remit directly overseas?
Cross-border transactions can engage RBI/FEMA and authorised dealers. Check permitted channels, documentation and any registration requirement.
What if a customer has no valid passport?
Require traveller acknowledgement of document/visa prerequisites, verify identity and set conditional booking/refund terms before purchasing non-refundable inventory.
Can a tour operator disclaim all safety liability?
Overbroad clauses do not displace non-waivable consumer and negligence obligations; verify suppliers and communicate emergency process.
What does travel insurance usually exclude?
Policy terms vary; disclose exclusions for activities, pre-existing conditions, cancellations and destination, without promising claim approval.
What should I do when a supplier changes the hotel category?
Document equivalence/price and obtain customer consent to material change; offer contractually and legally required options.
How do I book revenue on advance deposits?
Separate customer advances from earned agency fees or principal turnover, considering service obligations and actual accounting standards.
Which metric best predicts tour profitability?
Track gross booking value, net take-rate, cancellation rate, supplier credit, forex cost, agent commission and customer-service cost per booking.
Is a ₹1 lakh customer booking the agency’s revenue?
Not necessarily. An intermediary may earn only the commission/service fee while passing the balance to suppliers. Analyse the principal-agent role, control and contract under the accounting policy and separately determine tax treatment.
Can customer advances fund unrelated expansion?
That creates a serious liquidity risk where refunds or supplier payments are still due. Maintain booking-wise liabilities and a protected cash reserve appropriate to the commitments; distinguish money earned from money held for future service.
Does Ministry of Tourism recognition replace local permissions?
No. Recognition/empanelment and statutory State/local or activity-specific approvals answer different questions. Map the actual travel/adventure service, premises and supplier arrangements.
Can I guarantee that a visa will be granted?
Do not make a promise controlled by a foreign authority. Explain the documentation assistance, decision-maker, fees and refund consequences clearly; a service fee does not guarantee entry or visa approval.
How should an overseas quote handle exchange rates?
State the rate basis, validity and adjustment mechanism, and match supplier payment dates. Stress-test adverse movement on unhedged exposure. Do not present an illustrative workbook rate as a live or guaranteed conversion quote.
Are airline cancellation terms automatically my customer terms?
Explain the contractual relationship and disclose applicable supplier charges plus any agency fee before booking. Do not invent additional deductions after cancellation or imply that all charges are refundable when suppliers have valid restrictions.
How do I account for a supplier refund that has not arrived?
Track the customer refund obligation separately from the supplier receivable and assess recoverability. A delayed supplier refund does not necessarily eliminate the agency’s contractual or statutory obligation to the customer.
What is the sample model’s revenue unit?
It uses earned net agency/service revenue per completed booking, not ticket or package face value. For a principal tour business, replace the revenue and direct-cost inputs with the full package model and include supplier payment/cancellation timing.
What should be checked before an adventure package is sold?
Activity-specific local permission, operator qualifications, equipment/safety arrangements, emergency response, participant eligibility, insurance and truthful risk disclosures. A generic tour agreement is not a safety certification.
How should seasonal demand be financed?
Forecast bookings and cash by service month, advance-collection dates and supplier deadlines. Keep a low-season reserve and a mass-cancellation stress case. Annual average profit can conceal a cash shortage before a major departure.
Can all travel GST be based only on the commission?
No universal rule applies across agency, principal package, ticketing and intermediary arrangements. Determine the actual supplier, valuation, place of supply, applicable rate/exemption and credit conditions from the contracts and current law.
What should a travel-disruption runbook contain?
Traveller location and contact, immediate safety/assistance, supplier alternatives, authorisation limits, cost allocation, insurer notification and customer communication. Preserve evidence for later claims and avoid promising reimbursement before responsibility is assessed.
State/UT and city-level applicability test
- Is the chosen premises permitted for this exact business and capacity?
- Which State, city and sector permit applies to each activity and each operating location?
- Are there fire, building, waste, signage, labour or medical safety conditions for this site?
- Do thresholds, professional qualifications, inspection dates or renewals differ here?
- Has any 2026 amendment commenced, been notified or changed the relevant form/fee?
- Who is legally responsible for each filing, complaint, accident and customer refund?
What to check when a law or business model changes
Official sources and prescribed-form routes
Use the instrument applicable to the actual activity, jurisdiction and date. A directory is a route to the competent authority, not an individual licence determination.
Ministry of Tourism NIDHI — official scheme guidelines
Select the actual tourism category. The voluntary OTA scheme and its annexures do not replace other statutory permissions.
GST Council — official Central GST repository routes
Choose the exact operative Act, rule, classification and dated notification; a directory or Council recommendation is not the tax entry itself.
CBDT — Income-tax Act, 2025 commencement
Act effective 1 April 2026; Rules notified 20 March 2026. Match the tax year before using earlier section/form numbers.
India Code — Consumer Protection Act, 2019
Primary Act; read the separately applicable e-commerce, advertising and other subordinate instruments for the activity and date.
DGFT — IEC, foreign-trade policy, ITC(HS), SCOMET and eBRC
Goods and services have different IEC triggers; select the actual product policy and transaction.
National Single Window System — Know Your Approvals and State portals
Navigation framework; not a substitute for municipal or sector permissions.
Ministry of Labour — four Labour Codes commencement
21 November 2025 commencement; applicable Central/State rules and transition must be considered.
Gazette — DPDP Act phased commencement, G.S.R. 843(E)
13 November 2025; immediate, one-year and eighteen-month provision groups. Do not treat every substantive duty as already commenced.
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