The Finance Ministry has still not made a decision in the 29th GST council meeting on the rules and conditions to give a refund of GST on goods purchased by foreigners to take them out of India.
In response to an RTI query asking procedure for foreigners to claim a refund of GST on purchases made in India, the Finance Ministry replied that the government has not yet enforced Integrated GST provisions in this matter, therefore, foreigners will not be able to get GST refunds, as of now.
“Please note that Section 15 of the IGST (Integrated Goods and Services Tax) has not yet been enforced. Therefore the reply of this office…is nil information currently,” said the CBIC responding to the application.
Many western countries, including the UAE, provides a refund of taxes on purchases made by foreigners during their visits.
The present GST Act in this matter says, IGST paid by a tourist on any purchase of goods for the purpose of taking them out of India shall be “refunded in such manner and subject to such conditions and safeguards as may be prescribed. For the purposes of this section, the term ‘tourist’ means a person not normally resident in India, who enters India for a stay of not more than six months for legitimate non-immigrant purposes,” the Act says.
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The IGST Act defines rules for the levy (and refund) of taxes on various interstate supplies of taxable goods or services in the country.
It is time that the government decide on terms and conditions for refunds of tax paid by foreigners while visiting India, says senior GST professional Sandeep Chilana. “GST is a consumption-based tax. To the extent consumption is happening in India the taxes should stay in India. In case the goods are purchased in India and taken by the tourist outside India, it should be seen as export and a necessary refund should be available,” he added.
This could happen by the government setting up refund counters at specific points like airports, where tourists can get a refund of the goods & services tax paid by them on their purchases by showing specific documents like invoices along with a form/certificate. Most foreign countries, especially in Europe, grant a refund of taxes to foreigners upon receiving an application along with receipts of the purchases.
“I feel having a provision for refund of taxes to foreign tourists will definitely act as a motivation for international travellers. It will encourage them to spend more money in India. It will promote tourism in the country and help in generating foreign exchange from the tourists. It will give a huge impetus to demand various industries including handicraft, textiles etc.,” Chilana added.
