Question

Explain the various benefits given to the importer and exporters by central government for promoting export and import in the country.

Answer 1

The government of India encourages exports and imports and offer many incentives. These include -  

Advance Authorization Scheme - As per this scheme, the businesses are allowed to import the input in the country without paying a heavy duty payment, only if the input is for the production of an export item. The licensing authority has specified the value of the additional export products, not to be less than 15%. The economic scheme holds a validity of 12 months for imports and 18 months for carrying out the Export Obligation (EO) from the date of issue.

Duty Drawback - The Duty Drawback schemes allows the refund in respect of the Central Excise and Customs Duties paid in lieu of raw materials and other inputs used in the manufacture of the product, prior to export. The duty drawback rates in India is the special rebate granted under Section 75 of Indian Customs Act. Around 98% of the duty is allowable as a drawback, only after an official inspection. If the goods imported are consumed before its re-export, the potential drawback will be allowed at reduced percent.

Tax Concessions - Under Section 10A of the Income Tax Act, 1961 if any undertaking operates from a Special Economic Zone (SEZ) then the manufacturer is eligible for a deduction of export profits. The tax holiday is available for a total period of 7 assessment years, comprising a deduction of 100% export for 5 years followed by deducting 50% of export profits for the subsequent 2 years.

DFRC and DFIA - Under the Duty-Free Replenishment Certificate (DFRC), the import incentives are given to the exporter for the import of inputs used in the manufacture of goods without the payment of basic customs duty. Whereas under the Duty Free Import Authorisation (DFIA) the duty free of import of inputs that are used in the manufacture of the export product, fuel, energy, etc. that are utilised in the course of their use to obtain the export product is allowed.

Answer 2

There are a number of benefits offered to the importers and exporters by the central government for promoting import and export in the country. Some of those benefits include:

• Tax Concession  

• Duty-Free Import Authorisation (DFIA) and Duty-Free Replenishment Certificate (DFRC)  

• Duty Drawback

• Advance Authorization Scheme  

• Post Export EPCG Duty Credit Scrip Scheme

• Zero Duty Export Promotion Capital Goods (EPCG) Scheme

• Service Tax Rebate

• Market Access Initiative (MAI) Scheme