Government is thinking about GST refunds for foreign tourists’ purchases are about to be implemented. Given that the government intends to address the long-pending issue soon, foreign tourists may soon be able to claim refunds on the goods and services tax (GST) they paid when buying in India.
Sources indicate that the process and rules for refunding Tax to international visitors will be developed shortly and could be put into effect as early as the first quarter of next year. While the Integrated GST Act does provide for Tax refunds to be issued to foreign visitors for purchases made in the country that are then carried outside of the country, the rules and procedure have yet to be finalised. A source with knowledge of the situation has said that plans call for it to be picked up soon. Although taxes are rarely transferred, several governments offer refunds of GST or value added tax (VAT) to international visitors. Often, these reimbursements are available to international travellers at their departure airport.
The government has come to this conclusion because it believes the indirect tax regime has stabilised to a point where this is one of the few remaining concerns to be implemented. Before the idea can be finalised, it must be presented to the GST Council and receive its approval. Federal and state GST authorities may choose for a soft launch via trial run prior to a full-fledged rollout.
Pre-Budget suggestions from industry groups also urged government action on this front as a means of bolstering domestic tourism in the wake of the Covid-19 pandemic. Taxes paid on supplies made to tourists before they leave India are eligible for a refund under Section 15 of the IGST Act. To be considered a tourist, one must enter India for a visit of no more than six months.
The GST Act allows for the reimbursement of taxes to foreign tourists, but the method for claiming repayment has not yet been prescribed, according to tax experts.