Duty-free shops at airports to charge GST
24 April 2018
Duty-free shops at airports in Dubai, Singapore, Bangkok and other places selling alcohol and electronics can heave a sigh of relief as the number of Indians patronising their facilities will go up now with a new tax ruling in India.
The Delhi bench of the Authority for Advance Ruling (AAR) has said that goods sold at duty-free shops at the IGI airport are not exempt from duties under the tax regime.
While an estimated 25 million Indians travel abroad every year, a growing number have of late been buying alcohol, electronics and other gadgets from duty-free shops at Delhi, Mumbai, Bangalore and other international airports, as they do not have to carry the stuff with them from overseas.
A passenger has to make payment in foreign currency at any of these airports and gets a receipt entitling her / him to collect the duty-free package on returning home within a few days or a few weeks.
Many Indian visitors have noticed the competitive prices at which alcohol and other products are sold at these Indian airports; in many cases they are cheaper than the products sold even in Dubai or Singapore.
Carrying two or three bagfuls of duty-free products from cities abroad entails a lot of adjustments in personal cabin baggage, so Indian tourists have so far been preferring to pay for the stuff in advance in foreign currency at Indian airports and take deliveries while returning home.
Even the GST rules that were rolled out last July exempted duty-free shops at Indian airports from levying central sales tax and value-added tax as these were considered export sales and the supply was occurring outside the ‘customs frontiers’ of the country.
However, the Delhi bench of the AAR has now ruled that the duty-free shops are within India under the GST Act and buyers have to pay the applicable GST.
And since most of the items that are purchased by Indians travelling abroad are considered ‘luxury’ products, the duties will also be much higher.