What is Duty Free Shops? 

Duty Free Shops (or stores) are retail outlets at Departure or Arrival  Terminals of International Airports that stocks a wide range of products and brands in the categories of liquors, chocolates, perfumes and cosmetics, tobacco, fashion accessories and electronics.

The items are exempt from the payment of certain local or national taxes and duties, on the premise that the goods sold will be sold to travelers who will take them out of the country.

Duty Free Shopping allows international shoppers to browse and shop from a wide variety of high- end international brands at incredibly low prices, thanks to the exemption from several local and national taxes and duties on these products. This is because the merchant who imports these products is exempt from paying these taxes as they are selling them to customers who are leaving the country. Thus, the merchant is able to pass on the cost savings to the customer. This gives savvy shoppers the opportunity to grab fantastic merchandise at bargain prices and take advantage of numerous offers on these already low prices.

Who is eligible to shop duty free? 

As per Customs regulations, only passengers who have an international boarding pass and valid passport are eligible to shop duty free.

Confusion over Use of INR Credit Cards/Debit Cards

Representations have been received regarding lack of clarity in use of INR credit cards/debit cards for making payments by passengers at duty free shops located at International Passenger Terminals. It has been stated that merchandise on display at duty free shops is denominated in foreign currency and passengers have to bear conversion charges alongside of transaction fee and other charges. The matter was taken up with the Reserve Bank of India and DGFT. The Foreign Trade Amendment Order, 2017 dated 25.07.2017 has removed the restriction on duty free shops to sell merchandise to outgoing or incoming passengers against payment in foreign exchange. Further, the RBI has clarified that passengers can make payments through INR Credit Cards / Debit cards at Duty Free shops, directly in Indian Rupees.

Clarity Regarding Use of INR Credit Cards / Debit cards :

The Central Government vide Circular no. 50/2017-Customs dated 18th December, 2017 has clarified that the passengers can make use of INR credit cards/debit cards for making payments at duty free shops located at International Terminals, without any need for conversion of foreign currency into Indian Rupees.

Further, for the effective implementation of the above, DFS’s shall henceforth, mandatorily display the price of all goods on sale in Indian Rupees, only.

In view of the forgoing:

  • Payments made through an INR credit card / debit card at Duty Free Shops located in the arrival hall shall be subject to a limit of Rs 25,000/- for an incoming passenger.

Duty Free Shops at Arrival

  • However, payments through a INR credit card or debit card at Duty Free Shops located in the departure hall shall be without limit for an outgoing passenger.

Duty Free Shops at Departure

  • Duty Free Shops shall ensure that passenger making payments through an INR credit / debit card are not subject to paying for merchandise in foreign currency and accordingly do not have to bear any attendant charges for conversion of foreign exchange.
  • Since prices of merchandise for sale at a Duty Free Shops shall, henceforth, only be displayed in INR, any passenger desiring to make a payment in any foreign currency, shall be charged in foreign currency by applying the rate of exchange notified under Section 14 of the Customs Act, 1962 from time to time

Author : SN Panigrahi, GST Consultant, Practitioner, Corporate Trainer & Author

Can be reached @ snpanigrahi1963@gmail.com

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