Schemes for encouraging exportsPresentation Transcript
Schemes For Encouraging Exports
Export Incentives for Manufacturer Indigenous inputs w/o payment of excise duty No excise duty charged on final product Imported inputs w/o payment of customs duty No export duty on export of final product Fast finance at concessional interest rates Exemption from income tax Exemption from SALES TAX on final product (refund of CST paid on inputs in certain cases)
Input Duty Relief Scheme Various schemes – to obtain duty free inputs OR get refund later Some schemes – unit has to be isolated from domestic production units e.g. EOU, STP, EHTP and SEZ
Salient features of SEZ scheme• Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units• 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.• Exemption from minimum alternate tax under section 115JB of the Income Tax Act.• External commercial borrowing by SEZ units upto US $ 500 million in a year without any maturity restriction through recognized banking channels.• Exemption from Central Sales Tax.• Exemption from Service Tax.• Single window clearance for Central and State level approvals.• Exemption from State sales tax and other levies as extended by the respective State Governments
Salient features of SEZ scheme• Exemption from customs/excise duties for development of SEZs for authorized operations approved by the BOA.• Income Tax exemption on income derived from the business of development of the SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act.• Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act.• Exemption from dividend distribution tax under Section 115O of the Income Tax Act.• Exemption from Central Sales Tax (CST).• Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ Act).
Salient features of EOU scheme• No license required for import.• Exemption from Central Excise Duty in procurement of capital goods, raw- materials, consumables spares etc. from the domestic market.• Exemption from customs duty on import of capital goods, raw materials, consumables spares etc.• Reimbursement of Central Sales Tax (CST) paid on domestic purchases.• Supplies from DTA to EOUs treated as deemed exports.• Reimbursement of duty paid on furnace oil, procured from domestic oil companies to EOUs as per the rate of drawback notified by the Directorate General of Foreign Trade.• Facility to retain 100% foreign exchange proceeds in EEFC Account.• Facility to realize and repatriate export proceeds within twelve months• 100% Foreign Direct Investment permisisible.• Exchange earners foreign currency (EEFC) Account
Salient features of EOU scheme• Re-export of imported goods found defective, goods imported from foreign suppliers on loan basis etc.• Exemption from industrial licensing requirement for items reserved for SSI sector.• Profits allowed to be repatriated freely without any dividend balancing requirement• Access to Domestic Market upto 50% of FOB value of export on concessional rate of duty.• Duty free goods to be utilized in two years. Further extension granted on liberal basis.• Job work on behalf of domestic exporters for direct export allowed.• Conversion of existing Domestic Tariff Area ( DTA) unit into an EOU permitted
Supplies made to EOU by Indian supplier are ‘deemed exports’ and supplier is entitled to benefits of ‘deemed export’ Supplies to SEZ are ‘exports’ and all export benefits are available Restrictions under Companies Act on managerial remuneration are not applicable
Have to achieve +ve NFE (Net Foreign Exchange Earnings). A= FOB value of exports B = CIF Value of all imported inputs and capital goods and all payments made in foreign exchange NFE = A – B
EOU SEZ• EOU unit can be set up at any SEZ unit has to be located of over 300 places all over within the specified zones India developed• Fast Track Clearance Scheme Customs clearance for export (FTCS) for clearances of and import is obtained within imported consignments the zone itself• Minimum investment in plant No such limit and machinery and building = Rs 1 crore. This should be before commencement of Difficult to exit commercial production• Easy to exit
STP / EHTP unit Concept of STP/EHTP is similar to EOU/SEZ. Administered by Ministry of Information Technology. STP/EHTP unit can be set up as an EOU unit anywhere in India or as a SEZ unit at specified developed locations in India. A software development firm qualifies as STP/EHTP unit. Can import goods on loan from clients for specific period. Can export software electronically or through physical transport.
Other schemes –domestic producers are also entitled to get inputs/capital goods free of taxes, e.g. Advance License scheme Duty Entitlement Pass Book scheme (DEPB) Duty Free Replenishment Certificate scheme (DFRC) EPCG scheme Rebate of duty on inputs if final product is exempt from duty Under duty drawback scheme, custom/excise duty paid on inputs is returned as rebate