Section 15 of IGST  deals with refund of IGST paid on supply of goods to tourists leaving India (International Tourist) under Integrated Goods and Services Tax (IGST).

Section 15 of the IGST Act provides for refund to be allowed to ‘tourist’ on supply of goods being taken along by him at the time of leaving India. The refund to be allowed to him is subject to such condition and in the manner as may be prescribed (yet to be prescribed).

Explanation.–

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 nonimmigrant purposes.

“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 India for a stay of not more than six months for legitimate non-immigrant

Analysis:-

To  overcome exporting its taxes, outbound passengers leaving India accompanied by GST-paid goods purchased during their stay in India on which IGST has been paid are entitled to claim refund at the port-of-exit.

Refund  verification will be simple and online. It is interesting to note that only ‘integrated tax’ is eligible for this refund. Also, as per proviso to section 8(1), all supplies to such an outbound tourist will always be treated as inter-State supply.

That the  person seeking such refund must be a ‘tourist’ – who has entered India for genuine non-immigrant purposes. ‘Purpose’ of visit to India is key factor to be examined. Nationality, residency for tax purposes, etc. are irrelevant considerations.

The term ‘tourist’ has been defined in explanation to section 15 of the IGST Act to mean: a person not normally resident in India. who enters India for a stay of not more than six months. for legitimate non immigrant purpose. Thus, for being a tourist for the purpose of IGST, the person should be not normally resident in India and maximum stay should not exceed a period of six months. However, a foreign national who have come to India on a work permit and staying in India for a period exceeding six months will not be categorized as tourist for the purpose of IGST and thus would not be eligible for refund. The eligibility of refund is only on the goods being taken along with him while leaving India and not on any services used by him while his stay in India.

Conditions for availing Refund:-

One of the primary conditions provided by section 15 of IGST for the purpose of refund to the tourist is that refund would be eligible only on goods being taken along with him while leaving India.

Thus any goods purchased by him during his stay in India and consumed or disposed off in India will not be eligible for refund of GST paid on such goods.

Why only refund for Goods, not services GST is a consumption tax. The goods and/or services which are used (consumed) in India, it is the right of India (state of India) where such consumption took place, to collect tax.

The goods which are taken along by a tourist can not be considered to be consumed in India and it will be eligible for treatment given to export of goods. Thus, goods taken along by the tourist needs to be free from any taxes in India.

Refunding IGST to such tourist is a method by which such goods are made free from taxes in India. Charging of IGST Section 10 of the IGST Act provides the rule for place of supply of goods. According to these rules, in case goods supplied with in the same state is a intra state transaction and is chargeable to CGST and SGST. Since, Section 15 of the IGST Act prevails in the case of tourist.

The Supplier needs to take the proof of passport and visa of such tourist and then arrange to charge IGST on goods supplied to such tourist. Thus, the passport and copy of visa is an evidence with the supplier in India as the basis for charging IGST on such transactions.

Are Indians on work permit visiting India are tourists Such Indians coming to India for a short duration cannot be considered tourists for the purpose of IGST as section 15 of the IGST Act requires person not normally resident of India and coming to India for legitimate non immigrant purposes. Indians working in other countries remain Indian immigrants only. As such, they are not eligible to be called as tourists. Prescribed procedure as on date, no separate procedure has yet been prescribed for refund to be given to international tourists under the IGST Act, 2017.

Under GSTIGST is a tax levied on all Inter-State supplies of goods and/or services and will be governed by the IGST Act. IGST will be applicable on any supply of goods and/or services in both cases of import into India and export from India.

Detailed inclusions and exclusions can be expected in due course but few examples may be considered.

Tourist will excludes the following:-

  • Persons resident in India (not limited to Indian passport holders) who are exiting India for any purpose whether for short duration or long duration or uncertain duration.
  • Deputation of Indian resident to overseas diplomatic postings.
  • Children born in India to foreign nationals during their stay in India.

Tourist will include the following:

  • Crew of an international conveyance entering and exiting India within short duration even though not for purposes of tourism in India
  • Foreign diplomatic visitors on official duty in India
  • Foreign sports persons visiting India for participating in tournaments or training purposes
  • Foreign journalist and camera crew visiting India in connection with their profession
  • Foreign artists, musicians and actors visiting India to perform in shows or content production

Note: Provisions of this section are yet to be notified by the Government

Points for Consideration:-

  • Refund to be allowed to ‘tourist’ of integrated tax on supply of goods being taken along by him at the time of leaving India.
  • The refund to be allowed to ‘tourist’ is subject to such condition and in the manner as may be prescribed.
  • Foreign national who have come to India on a work permit and staying in India for a period exceeding six months will not be categorized as tourist for the purpose of IGST and thus would not be eligible for refund
  • The eligibility of refund is not applicable on any goods or services used by him while his stay in India.
  • Section 10 of the IGST Act provides the rule for place of supply of goods and supplied with in the same state is a intra state transaction and is chargeable to CGST and SGST. Since, Sec 15 of the IGST Act prevails in the case of tourist.
  • The Supplier needs to take the copy of passport and visa of such tourist as an evidence and then arrange to charge IGST on goods supplied to such tourist.
  • Refund verification will be simple, online and allowed at the port-of-exit.(Direct Transfer)
  • Purpose of visit to India is key factor to be examined. Nationality, residency for tax purposes, etc. are irrelevant considerations.
  • Indians coming to India for a short duration cannot be considered tourists for the purpose of IGST as section 15 of the IGST Act
  • An international tourist has been defined as a non-resident of India who enters India for a stay of less than 6 months. IGST would be charged on such supplies as the same in the course of export.

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Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. The document is made with utmost professional caution but in no manner guarantees the content for use by any person. It is suggested to go through original statute / notification / circular / pronouncements before relying on the matter given. The document is meant for general guidance and no responsibility for loss arising to any person acting or refraining from acting as a result of any material contained in this document  will be accepted by us. Professional advice recommended to be sought before any action or refrainment.

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