Foreign travellers may be eligible for tax refunds on purchases made in India
According to The Economic Times, the tourism and exports industries are lobbying the government to grant tax refunds to international tourists moving products outside India in order to attract more foreign visitors and encourage them to purchase more from the country.
The matter has been taken up by industrial organisations ahead of the Union Budget 2023–24. They have emphasised that Section 15 of the IGST Act of 2017 provides for tax refunds for travellers. The scheme, however, has yet to be implemented.
When the GST was implemented, the scheme was put on hold because “IT infrastructure needed to be enabled for its last-mile implementation,” but the industries association believes it is now ready to be implemented.
“It is included in our budget recommendations, and we have stated that it should be made available to all international tourists.” The fundamental infrastructure must be established. Our suggestion is straightforward: the GST on purchases made by foreign visitors should be returned to them. “It’s in the GST law and should be applied right now,” Rajiv Mehra, head of the Indian Association of Tour Operators, wrote to the finance ministry.
Emphasise the need for the government to implement a tax rebate for international visitors, Ajay Sahai, Director General of the Federation of Indian Export Organizations, added that similar schemes for visitors have already been implemented in Singapore, China, Thailand, and Dubai.
“They are profiting from increased sales and exports of local items to overseas visitors due to the extra incentive of tax refunds,” he added. “Many of these markets’ merchants compete directly with Indian stores across a wide range of commodities supplied, such as jewellery, textiles, and lifestyle products.”
Acknowledging that this practise will necessitate some coordination, Bipin Sapra, partner at EY India, described it as a “long-standing demand of the industry that will boot most of our labor-intensive exports like textile, leather, gems, and tea” and stated that it could be accomplished through a “central online system to expedite tax refunds.”
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