Foreign tourists might get GST refund for local shopping In India

Aug 03, 2022

By Debasree Chakraborty

Good news for shopaholics! Very soon, the Indian government will kick-start a pilot project for the repayment of goods and services tax or the GST paid by international tourists coming to India as part of a decision to execute a step that is there in the law.

Regarding the GST, it’s the Integrated GST Act that was enacted five years ago, and provides for refund on goods, which are to be taken out of the county by a tourist, who is not a resident of India, and has been in the country for not more than 6 months for non-immigrant purposes.

If reports are to go by, most countries follow a system of GST or VAT refund for tourists for consumption outside the country, as taxes are typically not exported, which is a principle followed in duty-free shops at airports as well.

Referring to this, government sources added that with the GST regime settling down, the Centre is in the process of setting up the said pilot, which will initially involve outlets, such as the Cottage Industries Emporium and, based on the experience, it will be expanded.

With regard to this, tax experts are of the view that several changes will be required to implement the said plan and that it will take time. To start with, even for a pilot, the rules to operationalise the project will need to be put in place, whereas the invoicing system will also require updating, which will likely require tweaking the GST Network architecture.
Experts added that the system needs to be foolproof to make sure there is no potential misuse. The machinery provisions to enable foreign tourists to claim a refund of the GST paid on eligible purchases of goods, should be drafted very carefully to ensure that there is no misuse of the provisions, while foreign tourists get a quick refund on their eligible purchases without too much paperwork, stated a professional in the know-how.