‘Duty free’ shopping at Delhi international airport to become costlier!

International passengers will now have to pay more for shopping at Delhi international airport, as from now on, passengers buying goods at airport 'Duty Free' shops will have to pay GST as well.

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According to the new indirect tax regime, the Authority for Advance Ruling (AAR) has declared that Duty Free outlets at Delhi international airport are not ‘free from duties.’

Earlier, Duty Free shopping was exempted from the levy of central sales tax (CST) and value-added tax (VAT) as a sale from such shops were considered as exports and supplies were taking place beyond the 'customs frontiers' of India.

AAR in the recent ruling has notified that supply of goods to the international passengers going abroad from Duty Free shops are taking place beyond the customs frontiers of India under Integrated GST Act, however, the said shops are within the territory of India under the Central GST Act.
“The AAR has upheld levy of GST on the premise of the said supplies not being taken ‘outside India’ by the duty-free shop and accordingly, it not qualifying as export. A narrow interpretation as above would entail increased prices and related uncompetitiveness for Duty Free shops; who are foreign exchange earners for India.” EY partner Jain said.

The step taken by the AAR would impact the shopping experience and will bring Duty Free shops at par with the shops outside.