Kolkata: Prices of perfumes, chocolates and tobacco sold at duty-free shops in Kolkata and 16 other international airports in the country will not skyrocket. At least not immediately.
Allaying fears of international fliers, tax experts told TOI the pronouncement by the Authority for Advance Ruling (AAR) that goods sold at the duty free shop at Delhi airport should be subject to GST will be challenged as the very existence of duty-free shops is at stake.
“Flyers purchase liquor, confectionery, perfumes and tobacco at duty-free shops as they get international brands at prices that are 30-40% lower than the market. If the AAR decision is implemented, the price of these goods other than liquor could go up by 9-14%. This will take away the sheen from duty-free shops,” said a representative of Flemingo, the largest operator of duty-free shops in India.
A state GST official said he was aware of the AAR ruling but was yet to get any circular from either the authority or GST council.
Prior to GST, duty-free shops were exempt from levy of central sales tax (CST) and value added tax (VAT) as sale from such shops were considered as exports and supplies were taking place beyond the customs frontiers. The New Delhi bench of the AAR has now ruled that supply of goods to international passengers going abroad from ‘duty-free’ shops may be taking place beyond the customs frontiers of India under Integrated GST Act, but the shops are within the territory of India under the Central GST Act, and hence, subject to CGST. GST rate on chocolates and perfumes is 18% and tobacco is 28%. There is an additional surcharge and cess.
30/04/18 Subro Niyogi and Udit Prasanna Mukherji/Times of India
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Allaying fears of international fliers, tax experts told TOI the pronouncement by the Authority for Advance Ruling (AAR) that goods sold at the duty free shop at Delhi airport should be subject to GST will be challenged as the very existence of duty-free shops is at stake.
“Flyers purchase liquor, confectionery, perfumes and tobacco at duty-free shops as they get international brands at prices that are 30-40% lower than the market. If the AAR decision is implemented, the price of these goods other than liquor could go up by 9-14%. This will take away the sheen from duty-free shops,” said a representative of Flemingo, the largest operator of duty-free shops in India.
A state GST official said he was aware of the AAR ruling but was yet to get any circular from either the authority or GST council.
Prior to GST, duty-free shops were exempt from levy of central sales tax (CST) and value added tax (VAT) as sale from such shops were considered as exports and supplies were taking place beyond the customs frontiers. The New Delhi bench of the AAR has now ruled that supply of goods to international passengers going abroad from ‘duty-free’ shops may be taking place beyond the customs frontiers of India under Integrated GST Act, but the shops are within the territory of India under the Central GST Act, and hence, subject to CGST. GST rate on chocolates and perfumes is 18% and tobacco is 28%. There is an additional surcharge and cess.
30/04/18 Subro Niyogi and Udit Prasanna Mukherji/Times of India
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