- 1. C hapter 13 Export Incentives
2.
- The various incentives/exemptions available to exporters in
India in greater details:
- Free Trade & Warehousing Zones
- EOUs, Electronic Hardware Technology Parks, Software Technology
Parks,Bio-Technology Parks
3.
- VAT at zero rate and full credit of input tax is also available
to a dealer directly selling to an exporter provided the same goods
are actually exported.
- The exporter needs to provide the following documents as
evidence of goods exported:
- Copy of export contract or order from a foreign buyer
- Copy of the customs clearance certificate
- Copy of the commercial invoice issued to the foreign buyer
- Copy of Bill of Lading/Air-Way Bill
- Proof of payment from the foreign purchaser or letter of
credit
Cont. 4.
- Theexporter can make use of 'H Forms' supplied by the CST
(Central Sales Tax) authorities that are being continued even now
in the VAT regime.
- The application has to be supported by the following
documents:
- Copy of Customs Certified Shipping Bill
- Copy of Customs Certified Invoice
- Copy of Confirmed Export Order
- The supplier, on the other hand, can submit the following
documents with his VAT return to justify zero rating of his
particular sale to the exporter:
- Purchase order from exporter.
- Copy of Bill of Lading/Air-Way Bill
5.
- Excise is a tax on production or manufacture of goods. It is a
duty levied on the production of goods and the liability of payment
of excise duty arises immediately upon manufacture of goods. In
India, excise duty is governed by the provisions of the Central
Excise Act, 1944.
- Exporters can avail excise clearance in the following
ways:
- Exports under Claim of Excise Rebate
6.
- Procedure for Filing the Rebate Claim and its Sanction
- Application in the prescribed form
- Duplicate copy of ARE-I/ARE-II in sealed cover received from
CustomsOfficer
- Duly attested copy of Bill and Lading
- Duly attested copy of shipping bill (export promotion
copy)
- Original copy of duly ARE-I/ARE-II duly endorsed by the Customs
Officercertifying the export of the consignment
- disclaimer certificate in case where the claimant is other than
the exporter.
- Export under Bond -Under Rule 19 of Central Excise Rules, an
exporter is permitted to remove excisable goods for export without
payment of excise duty by executing a bond (legal undertaking) in
favour of the excise authorities for the amount of the excise duty
payable.
7.
- Duty drawback is an incentive given to the exporters of
different categories of goods under the "Customs and Central Excise
Duty Drawback Rules, 1995". The duty drawback scheme is
administered by the Directorate of Duty Drawback in the Ministry of
Finance, Government of India.
- There are two types of drawback rates:
- Brand/Special Brand Rates
8. Income Tax Concessions Under Section 10A of the Income Tax
Act, 1961 undertaking operating from a Special Economic Zone (SEZ )
that manufactures articles/things or computer software are eligible
for deduction of export profits. For undertaking commencing
operation from the notified Special Economic Zones (SEZs) on or
after 1st April, 2002, the tax holiday is available for a total
period of seven assessment years, comprising of a deduction of 100%
of export for five years followed by deduction of 50% of export
profits for subsequent two years. 9.
- The Government of India has several schemes in place that allow
the exporters to import inputs/ capital goods at concessional rates
of import duty. The schemes are discussed below:
- Export Promotion Capital Goods Scheme (EPCG)
- Duty Free Import Authorisation Scheme
- Duty Exemption Passbook Scheme (DEPB)
10.
- Duty Free Import Authorization Scheme
- This scheme is the latest improvement announced in the Annual
Supplement 2006 to the FTP 2004-09. The new scheme seeks to clubs
the Advance Licencing scheme and the Duty Free Replenishment
Certificate and were to come into effect from May 1, 2006.
- Advance Licence can be issued for the following:
- An Advance Licence contains:
- The names and description of items to be imported and
exported/supplied.
- The quantity of each item to be imported or wherever the
quantity cannot beindicated, the value of the item shall be
indicated.
- The aggregate CIF value of imports.
- The FOB/FOR value and quantity of exports/supplies.
11. Duty Entitlement Passbook (DEPB) Scheme Under DEPB (Duty
Entitlement Passbook) Scheme, exporters are allowed to claim
customs duty credit as a specified percentage of FOB value of
exports made in freely convertible currency. The objective of DEPB
is to neutralize the incidence of Customs duty on the import
content of the export product. The neutralization shall be provided
by way of grant of duty credit against the export product. The
scheme launched in 1997 is likely to be replaced by some superior
alternative that is being worked out through a dialogue with the
export community. Under the DEPB. The DEPB is valid for a period of
24 months from the date of issue. 12. Special Economic Zones In
order to create an internationally competitive and smooth working
environment for exports in India, the Government of India
formulated the Special Economic Zone policy on 1/4/2000. Under the
current foreign trade policy, Special Economic Zone (SEZ) is
defined as a specifically delineated duty free enclave that is
deemed to be foreign territory for the purposes of trade operations
and duties and tariffs. Goods and services going into the SEZ area
from DTA (Domestic Tariff Area) are to be treated as exports and
goods coming from the SEZ area into DTA are to be treated as
imports. 13.
- Strong telecommunication backbone
- A unique work environment that powers the city
- Optic-fibre cable network
- On-site sub-station for failsafe power
- Rail station onsite to provide for easy cost effective
transport options
- Pollution-free, clean and green environment
Cont. 14.
- The following facilities/incentives are available to units in
SEZs:
- No licence required for import.
- Exemption from customs duty on import of capital goods, raw
materials,consumables, spares etc.
- Supplies from DTA to SEZ units treated as deemed exports.
- Reimbursement of Central Sales Tax paid on domestic
purchases.
- 100% income tax exemption for a block of five years, 50% tax
exemptionsfor two years and up to 50% of the profits ploughed back
for the next threeyears under Section 10-A of Income Tax Act.
- SEZ units may be for manufacturing, trading or service
activity.
- SEZ unit to be positive net foreign exchange earner within
three years.
- 100% Foreign Direct Investment in manufacturing sector allowed
throughautomatic route, barring a few sectors.
- Facility to retain 100% foreign exchange receipts in EEFC
Account.
Cont. 15.
- Facility to realize and repatriate export proceeds within 12
months.
- Re-export imported goods found defective, goods imported from
foreignsuppliers on loan basis etc.
- Domestic Sales on full duty subject to import policy in
force.
- Full freedom for sub-contracting including sub-contracting
abroad.
- Job work on behalf of domestic exporters for direct export
allowed.
- No routine examination by Customs of export and import
cargo.
- No separate documentation required for Customs and Exim
Policy.
- In-house customs clearance.
- Support services like banking, post office clearing agents
etc.
16.
- Free Trade and Warehousing Zones
- The units functioning out of such zones will be extended:
- Income Tax Exemption as per Section 80-IA of the Income Tax
Act
- Exemption from Service Tax
- Free foreign exchange currency transactions
- Other benefits as applicable to units in Special Economic
Zones
17.
- They are allowed licence/certificate/permissions and Customs
clearancesfor both imports and exports on self-declaration
basis.
- Fixation of Input-Output norms on priority within 60 days.
- They are allowed exemption from compulsory negotiation of
documentsthrough banks. The remittance, however, needs to be
received throughbanking channels.
- 100% retention of foreign exchange in EEFC account.
- They are permitted enhancement in normal repatriation period
from180 days to 360 days.
- They are entitled for consideration under the Target Plus
Scheme.
- They enjoy exemption from furnishing of Bank Guarantee in
schemes underthe foreign trade policy.
18.
- Supply of goods against Advance Licence/Advance Licence for
annualrequirement.
- Supply of goods to Export Oriented Units.
- Supply of capital goods to holders of licences under the Export
PromotionCapital Goods (EPCG) scheme.
- Supply of goods to projects financed by multilateral or
bilateral agencies.
- Supply of capital goods, including in unassembled/disassembled
condition aswell as plants, machinery, accessories, tools,
dyes.
- Supply of goods to any project or purpose in respect of which
the Ministry ofFinance.
- Supply of goods to the power projects and refineries not
covered in (vi)above.
- Supply of marine freight containers by 100% EOU.
- Supply to projects funded by UN agencies.
- Supply of goods to nuclear power projects through competitive
bidding asopposed to International Competitive Bidding.
Cont. 19.
- Deemed exports are allowed the following privileges:
- Advance Licence for intermediate supply/deemed export/DFRC/DFRC
forintermediate supplies
- Exemption from terminal excise duty where supplies are made
againstInternational Competitive Bidding. In other cases, refund of
terminal exciseduty will be given.