Duty Drawbacks Incentive Schemes on Exports

India’s economy is one of the fastest growing economies in the world. As a part of economic reforms, the government has formulated many economic policies which have led to the country’s gradual economic development. The Government of India has introduced many enticing incentive programmes for boosting Exports and the Duty drawback Incentive scheme is one of the most encouraging one in vogue now with Exporters in India.  Duty drawback incentive schemes are issued by the Directorate of Drawback. Duty Drawback is the rebate of any duty that is chargeable on imported or excisable materials that you use to manufacture or process goods that you then export from India.

Understanding Duty Drawbacks

Duty Drawback incentives rebates Customs and Central Excise duties chargeable on any imported materials or excisable materials used in the manufacture of goods exported. The Indian Government is empowered to grant duty drawbacks under section 74 and 75 of the Customs Act, 1962. Under section 74 -to the extent of 98 percent of the duty paid on imported goods can be claimed for re-export.  Section 75- empowers drawback on export of manufactured articles. There are some pre-

requisites to be fulfilled in order to avail drawback incentives such as the goods must be previously imported and Import duty must have been paid. The goods should be entered for export within two years, Goods identified as imported goods and the goods must actually be re-exported to any place outside India.

Categories and Rates of Duty Drawback

Drawback incentives are divided into two categories, Drawback allowable on re-export of duty-paid goods and Drawback on imported materials used in the manufacture of goods which are exported.

Rate types for duty drawback include the following

All Industry Rates: All Industry Rate (AIR) are fixed after extensive discussions with all stake holders viz. Export Promotion Councils, Trade Associations, and individual exporters to solicit relevant data, which includes the data on procurement prices of inputs, indigenous as well as imported, applicable duty rates, consumption ratios and FOB values of export products.

Brand Rate: This rate pertains only to special products. Under this scheme, the exporters are compensated by paying the amount of Customs, Central Excise duties and Service Tax incidence actually incurred by the export product. For this purpose, the exporter has to produce documents/proof about the actual quantity of inputs / services utilized in the manufacture of export product along with evidence of payment of duties there upon.

Special Brand Rate: A company or Exporter can apply for this rate if the actual duty that is paid on the input goods is higher than the All Industry Rate that is fixed for the product.

Duty Drawback enables exporting companies to obtain a refund and helps neutralizing the tax element in export products; this is an internationally accepted methodology to encourage exports.  . It helps to encourage the export and to make the foreign exchange though export. The main worry of exporters now is the delay in getting duty drawback, since there is a lot of documentation involved. The exporter has to keep a track of not only the Pre-Shipment documents of his exports but also track documents used in the Import of raw materials of partial goods for this scheme. This would be a very laborious and time consuming process .Expodite is a Exports Documentation Management application which is adept in handling all Export documents making your exports process a hassle free experience and help you realize your Export incentives without any delays or hurdles. Get in touch with our Executives to know more about our Export Document management software and other export solutions.

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