GST Refunds on Shopping for Foreign Tourists; Govt Working on Rules and Procedures

Foreign tourists may soon be able to claim refunds on goods and services tax (GST) paid for shopping in India, as the government is developing processes and rules for the long-delayed implementation of such IGST Act provisions.

According to insiders, work on the system and criteria for Tax refunds to international tourists will begin soon and might be implemented as early as next year. “While the Integrated GST Act provides for GST refunds to foreign visitors for local purchases taken out of the country, the rules and procedures must be finalised. That is expected to be taken up soon,” according to a source familiar with the situation. Because taxes are not normally exported, a few of countries offer GST or value added tax (VAT) refunds to foreign tourists. International travellers can usually collect these reimbursements at the airport when they leave.

As a result, the rules and processes for Tax refunds to international tourists would be developed in the near future. This action is consistent with the Integrated GST Act, which already allows for GST refunds to foreign visitors for local purchases taken out of the country. Tourists departing India after a stay of no more than six months can claim a refund on the tax paid for any supply of goods taken out of India under Section 15 of the IGST Act.

Many countries allow foreign tourists to obtain GST refunds since taxes are not exported or there are no export taxes. As a result, when departing, foreign tourists can receive Tax refunds at the airport.

Because India’s GST system is now sufficiently stable and well-established, a method for refunding Tax to foreign visitors is being developed or implemented to close the gaps in the GST regime‘s implementation.

This idea is scheduled to be reviewed and accepted at the upcoming GST Council meetings, with a soft launch via a pilot run prior to full adoption.

According to trade and industry, the government is likely to take up the issue of introducing GST refunds for international tourists shortly, as it might encourage domestic tourism, particularly in the wake of the Covid-19 pandemic.