Business & Finance

GST refund to foreign tourists at airports on the cards

Foreign tourists might get to claim Goods and Services Tax (GST) refunds at airports soon when they exit from the country as the revenue department is working on a mechanism to refund taxes levied on purchases by them.

Initially, purchases made by tourists from big retail shops will only be eligible for Goods and Services Tax (GST) refunds at the airports when the tourist is leaving the country, an official said. The department is working on a mechanism which will make sure refund of GST to foreign tourists and for that purpose, the field offices have to be sensitised, the official added in his statement.

“It has to be ensured that refunds are not claimed on the basis of fake invoices. The refund mechanism could start on the basis of invoices issued by big retailers,” the official told.

A way of providing GST refund to tourists have been made in the GST law, but it is not operational yet.

The law has defined the term ‘tourist’ normally as a person who is not normally a resident of India, who enters India for a stay of not more than six months for non-immigrant purposes.

Also read: Follow Centre’s footsteps, waive state GST on langar: Harsimrat to Punjab government

AMRG & Associates Partner Rajat Mohan said tourist refund claims are a great inbound tourism marketing technique with a low cost to the exchequer.

In a lot of countries VAT or GST are refunded to the tourists for purchases made beyond a prescribed threshold.

“Internationally, countries like Singapore and Australia have an online robust system connecting multiple refund agencies and retailers on a single platform, offering tourists a seamless and hassle-free experience while verifying, processing and disbursing the tax refunds. Matching such state-of-the-art systems could be a technological nightmare for Indian counterparts,” Mohan said.

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