GST or Goods and Services Tax is an indirect tax levied on the consumption of goods and services supplied in India. Many countries that have implemented GST like Canada, Australia, New Zealand and others offer GST refund for tourists visiting their country. Similarly, in the GST Act, provisions exist for foreign tourists visiting India to claim a refund of GST payment made. In this article, we look at GST refund for Tourists and the procedure for claiming a refund as a Tourist.
Section 15 of the Integrated Goods and Service Tax (IGST) Act deals with refund of integrated tax paid on supply of goods to tourist leaving India.
The revenue department is working on a mechanism to refund GST paid by foreign tourists on local purchases, which will allow them to claim the refunds at airports when they are leaving the country. According to an official, in order to do that, the field offices will have to be sensitized first. So, initially, only purchases from big retailers would be eligible for GST refunds. “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 explained, as mentioned in agency reports.
Although a provision for GST refund to tourists has been made in the GST law, it is yet to be operational. The law has defined the term ‘tourist’ as a person who’s not normally a resident in India, who enters the country for a stay of not more than six months for legitimate non-immigrant purposes.