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Export Assistance, Import Facility, Tax Concessions and Duty Drawbacks
Export Assistance, Import Facility, Tax Concessions and Duty Drawbacks
Export Promotion schemes & Incentives Duty Exemption Schemes- Advance license
Advance license (authorization) issued to allow duty free import
of inputs, which are physically incorporated in export product. These schemes are : Advance Authorization Duty Free Import Authorization (DFIA)
These are calculated On the basis of average consumption of inputs, duties & taxes paid, quantity of wastage & export price of exported products.
These are given either on quantity basis (per kg) or on ad valorem basis (as % of FOB value) & are reviewed and revised periodically.
Some of the features of SEZ are: Export & Import : Goods & services going into the SEZ area
from DTA shall be treated as deemed exports and the domestic suppliers are eligible for deemed export benefits. Similarly, goods & services coming from SEZ area into DTA shall be treated as if the goods are being imported. The entire production of SEZ must be exported & DTA sales are permitted only after payment of full applicable customs duties. Activities permissible : Foreign direct Investments: (FDI) : FDI upto 100% is allowed through automatic route for all manufacturing activities, except prohibited items. Promotional Package: Exemption from payment of CED on procurement of capital goods, raw materials, consumable spares etc. from the domestic market.
EPCG Scheme:
Obligation under EPCG scheme relaxed. To aid technological up gradation of export sector, EPCG Scheme at Zero Duty has been introduced. Export obligation on import of spares, moulds etc. under EPCG Scheme has been reduced by 50%.
Pharma sector included under MLFPS for countries in Africa and Latin America & some countries in Oceania and Far East.
IMPORT FACILITY
Eg. An EOU/EHTP/STP/BTP unit may import and/or procure from DTA or bonded warehouses in DTA/international exhibition held in India without payment of duty all types of goods, including capital goods, required for its activities, provided they are not prohibited items of import in the ITC (HS).
Input output norms have been specified for more than 4200 items which tell about the amount of duty free import of inputs allowed for specified products. There are no restrictions on imports of capital goods. Import of second hand capital goods whose minimum residual life is of five years is permitted.
Export Promotion Capital Goods (EPCG) scheme provides exporters to import capital goods at a concessionary custom rates. In the past 30 years Indian imports have risen quite dramatically. At present imports accounts for 17% of the GDP. Capital goods have been continued to be imported and in the last three years, their share has fallen from 25% to 22%.
A new 8-digit commodity classification based ITC Harmonised System of coding for imports were adopted in 2002. The common classification used by the Directorate General of Foreign Trade (DGFT) and Customs helps eliminate classification disputes and reduce transaction costs and time.
The Department of Revenue, Ministry of Finance, Government of India has issued a Customs Notification No.107/2008 notifying the duty concessions applicable for import of about 259 specified items under South Asian Free Trade Agreement (SAFTA). applicable for import of specified items from four countries namely Bangladesh, Bhutan, Maldives and Nepal. Also, the extent of tariff concession will be on the applied or standard rate of import duty.
TAX CONCESSIONS
Tax Incentives
4. Industrial Parks and Special Economic Zones 10 years tax holiday is applicable to ventures that develop and /or operate or maintain in notified IT parks and special economic zones. 5. Other Industries: 5-year tax holiday is available for new industrial units to be set up in backward states and districts. 6. Incentives for Exports: No Tax is deducted on exporters profits for unit set up on EPZs, STPs, EHTPs, FTZ and SEZs. 7. Other Incentives: Tax concessions are allowed for FTI and a weighted deduction of 150% for scientific research and development expenditure have been offered. 10 years tax holiday is available for R&D companies engaged in scientific and industrial research.
AGRICULTURE
The various benefits offered by the Finance Minister to support agriculture sector in Union budget 2010 are: Complete service tax exemption for the establishment and sponsoring of such apparatus. Complete customs tax exemption for refrigeration divisions required for the production of chilled vans or trucks Benefit of 5% concessional customs tariffs on particular agricultural equipment not created in India
Tax exemption from central excise tariff on particular equipment for conservation and processing of agriculture and associated sectors Tax exemption from service tariff on the conservation and warehousing of farm produce. Service tax exemption on the testing and documentation of agricultural seeds Service tax exemption on the transportation of cereals and pulses by rail and road.
Indirect Taxes Restore the basic duty of 5 per cent on crude petroleum; 7.5 per cent on diesel and petrol and 10 per cent on other refined products. Central Excise duty on petrol and diesel enhanced by Re.1 per litre each. The government has levied a one rupee per liter excise duty on gasoline and diesel this may increase transportation cost.
Agriculture & Related Sectors Provide full exemption from customs duty to refrigeration units required for the manufacture of refrigerated vans or trucks. Provide concessional customs duty of 5 per cent to specified agricultural machinery not manufactured in India;
Provide central excise exemption to specified equipment for preservation, storage and processing of agriculture and related sectors and exemption from service tax to the storage and warehousing of their produce; and Provide full exemption from excise duty to trailers and semi-trailers used in agriculture
To exempt the testing and certification of agricultural seeds from service tax. This will help to reduce the cost of certified seeds manufacturers and at the same time farmers can afford it at lower price. The transportation by road of cereals, and pulses to be exempted from service tax. Transportation by rail to remain exempt.
To ease the cash flow position for small-scale manufacturers, they would be permitted to take full credit of Central Excise duty paid on capital goods in a single installment in the year of their receipt. Secondly, they would be permitted to pay Central Excise duty on a quarterly, rather than monthly, basis. Reduction in basic customs duty on long pepper from 70 per cent to 30 per cent; Reduction in central excise duty on latex rubber thread from 8 per cent to 4 per cent;
Excise duty has been rolled back to 10 % from 8 %. Owing to this Steel Authority of India (SAIL) is expected to raise long product prices by Rs.1,000 a ton in March in order to pass on the higher duty burden.
SEZ
A Special Economic Zone (SEZ) is a geographical region that has economic laws that are more liberal than a country's typical economic laws. The category 'SEZ' covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. Usually the goal of a structure is to increase foreign direct investment by foreign investors, typically an international business or a multinational corporation (MNC).
Exemption from Capital Gains Capital gains arising on transfer of assets (machinery, plant, building, land or any rights in buildings or land) on shifting of the industrial undertaking from an urban area to any SEZ would be exempt from capital gains tax.
No TDS by Overseas banking Units (OBUs) on interest on deposits/borrowings from nonresident or person not ordinarily resident
SEZs
Income tax: Deduction from Profits and Gains from export of goods/services as follows (Section 10AA)100% income tax exemption for first 5 years 50% income tax exemption for next 5 years No MAT (Minimum Alternate Tax)
Indirect taxes
SEZ units may import or procure from the domestic sources. Duty free, all their requirements of capital goods, raw materials, consumables, spares, packaging materials, office equipment, DG sets etc. for implementation of their project in the Zone without any license or specific approval No import duty on these goods imported No excise duty on these goods procured from DTA (Domestic Tariff Area)
No service tax on services availed from DTA (Domestic Tariff Area) No Value Added Tax (VAT) and Central Sales Tax (CST) on goods procured from DTA (Domestic Tariff Area) On goods procured from DTA, drawback under section 75 allowed to SEZ unit Goods imported/procured locally duty free could be utilised over the approval period of 5 years
Reduce import duties on finished jewellery into India. Recommends uniform VAT rates of 1% to be implemented across India and maintain the same rate. In addition the above, clarification is to be given to all states that VAT set off is to be allowed when raw material is issued from one state to another state for manufacturing of jewellery.
The exercise is underway in the Ministry to rework and revise the rates of duty drawback for the year 2009-2010. All Industry Rates of Duty Drawback are worked out by considering the consumption of input materials/ services and the incidence of duties/taxes on these input materials/ services.
KINDS OF DRAWBACKS
Unused Merchandise: Imported merchandise is unused and exported or destroyed under Customs supervision. 99 percent of the duties, taxes or fees paid on the merchandise may be recovered as drawback. Substitution Unused Merchandise: Merchandise that is commercially interchangeable with imported merchandise upon which duties and taxes were paid and that has not been used, is exported or destroyed under Customs supervision. 99 percent of the duties, taxes or fees paid on the merchandise may be recovered as drawback.
Rejected Merchandise: Merchandise is exported or destroyed because it does not conform with samples or specifications, or has been shipped without the consent of the consignee, or has been determined to be defective as of the time of importation. 99 percent of the duties which were paid on the merchandise may be recovered as drawback. Direct Identification Manufacturing: If articles manufactured in the United States with the use of imported merchandise are subsequently exported or destroyed then drawback not exceeding 99 percent of the duties paid on the imported merchandise may be recoverable.
Substitution Manufacturing: Both imported merchandise and any other merchandise of the same kind and quality are used to manufacture articles, some of which are exported or destroyed before use, then drawback not exceeding 99 percent of the duty which was paid on the imported merchandise may be payable on the exported/destroyed articles
191.7, of the Customs Regulations (19 C.F.R. 191.7) and are designed to simplify drawback for certain common manufacturing operations.
(2) Specific Manufacturing Drawback Ruling Where a manufacturer or producer cannot follow any one of the prescribed general manufacturing rulings without variation, the manufacturer or producer must apply for a specific manufacturing drawback ruling under Section 191.8. Sample formats for specific manufacturing drawback rulings are contained in Appendix B to Part 191, Customs Regulations (19 C.F.R. Part 191).
Export Procedure
Duty Drawback for Past Exports. Waiver form requirement of prior notice of intent to export must be supported by a direct inventory identification method. The conditions for identification by accounting method are: The lots of merchandise must be fungible Inventory records must establish that the lots so identified as being received into and withdrawn from the same inventory are being used in the ordinary course of business.
All receipts into and all withdrawals from the inventory must be recorded in the accounting record. Subject to verification by Customs . It must be used without variation for a period of at least one year unless approval is given by Custom for a shorter period.
Waiver of Prior Notice of Intent to Export You may be eligible for Waiver of Prior Notice under Section 191.91 of the Customs Regulations. The approval is based on the submission of an application and compliance with the regulations. Claim Period In the case of unused merchandise drawback, it is necessary to establish that the merchandise was exported or destroyed within three years from the date of import
In the case of rejected merchandise drawback, you must establish that the merchandise was returned to Customs custody within three years after it was originally released from Customs custody. In the case of manufacturing drawback, you must establish that manufactured articles on which drawback is being claimed were exported within five years from the date of import.
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