The government is considering goods and services tax (GST) refunds for foreign tourists at the airport at the time of exit, though for now it is limited to local purchases at big retail stores, an official said.
In step with an international practice of refunding value added tax (VAT) to tourists for purchases made beyond a prescribed threshold, the revenue department is drawing up a mechanism to refund taxes.
"It has to be ensured that refunds are not claimed on the basis of fake invoices. The refund mechanism could start on the basis of invoices issued by big retailers," the official told PTI, adding, field offices have been sensitised to take this further.
The GST law features a provision for refund to tourists, but it is yet to be operational. The law has defined the term 'tourist' as a person not normally resident in India, who enters India for a stay of not more than six months for legitimate non-immigrant purposes.
AMRG & Associates Partner Rajat Mohan said tourist refund claims is a great marketing technique to encourage tourism with the exchequer hardly losing anything. He said countries world over have a state-of-the-art system in place that connect multiple refund agencies and retailers on a single platform. This ensures tourists have a smooth experience of the whole exercise of verifying, processing and disbursing the tax refunds. This will be quite a challenging exercise for India, he said.