Many countries such as Canada, Australia, New Zealand, and others implemented GST and offer GST refunds for tourists visiting their countries. Similarly, in India, the GST Act provides options to avail GST refunds for foreign tourists visiting India. The refund applies for the GST goods purchased in India as Goods and Services Tax (GST) functions as an indirect tax levied on the consumption of goods and services supplied in India.
GST Refund for Tourists (Rule)
Section 15 of the Integrated Goods and Service Tax (IGST) Act deals with a refund of integrated tax paid on the supply of goods to tourists leaving India. According to Section 15 of the IGST Act:
Refund applies to the integrated tax paid by foreign tourists leaving India on any supply of goods taken out of India. The refund of the integrated tax applies to the purchase made by the foreign tourist leaving India as per the conditions prescribed in the IGST Act.
Explanation: For the purposes of this section, the term “tourist” refers to a person not normally resident in India, who enters India for a stay of not more than six months for legitimate non-immigrant purposes.
Hence, tourists visiting India who enter and stay for not more than six months for legitimate non-immigrant purposes are eligible to claim a refund of IGST paid on the supply of goods taken out of India.
It is important to note that GST refunds for tourists will not be allowed on goods or services that they consumed while in India. The refund applies only to the supply of goods taken out of India by the tourist; hence the product remains unconsumed in India.
Process for Claiming GST Refund
The GST Refund Rules are yet to provide a methodology for Foreign Tourists visiting India to claim a GST refund. The government will soon begin a pilot to refund goods and services tax (GST) paid by foreign tourists visiting India as part of a move to implement a measure that is there in the statute.
Government sources said with the GST regime settling down, the Centre is discussing the possibility of a pilot, which will involve outlets such as the Cottage Industries Emporium and, based on the experience, it will be expanded.
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