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FAQ

Can I get a strong debate speech against GST?
you can.GST is an exit level tax, to be paid at consumption, however in case of export goods the end consumer does not come under the liable persons to pay GST, however, the exporters in India can still claim a refund of the tax paid by them under GST. This is a shift from the present duty drawback scheme and in the same consequence is an attempt to encourage exports and improve the Balance of Payments situation of India.The duty drawback scheme is aimed at neutralizing customs duty, central excise and service tax on any imported materials or excisable materials used or taxable services used as input services in the manufacture of export goods. GST does not put an end to the duty drawback scheme, it would now just be limited to customs duties on imported inputs and central excise duty on items specified in the Fourth Schedule to Central Excise Act 1944 (specified petroleum products, tobacco etc.) which are used as inputs or fuel for captive power generation.However to initiate the process the non–availment needs to be furnished, failing which the shipping bill will not proceed to the LEO stage. In such cases, to avoid unnecessary delay, exporters can amend the shipping bill to claim lower rate. Afterwards, the exporter will have an option to file the supplementary claim as per Drawback Rules at a later date once the certificateis obtained.to know more about GST visit legalsalah website now‡ https://www.legalsalah.com
What is drawback?
Concept of Duty DrawbackIntroductionDuty Drawback has been one of the popular and principal methods of encouraging export. It is a relief by way of refund/ recoupment of custom and excise duties paid on inputs or raw materials and service tax paid on the input services used in the manufacture of export goods.Duty drawback provisions are given under section 74 and 75 of the Customs Act, 1962. section 74 allows duty drawback on re-export of duty paid goods. Whereas section 75 allows drawback on imported goods used in the manufacture of export goods. In order to facilitate the drawback procedures, the Central Government is empowered to make rules. Pursuant to such power, the Central Government has issued two rules, i.e., Re-export of Imported goods (Drawback of Custom Duties) Rules, 1995 and Customs and Central Excise Duties and Service Tax Drawback Rules, 1995.Drawback on re-export of duty paid goods under Section-74Section 74 of the Act grants duty drawback upto 98% of the import duty paid on goods, if the goods are re-exported by the importer. The importer is entitled to drawback subject to the fulfilment of the following conditions:Goods are imported into India by making payment of customs duty;Goods are identified to the satisfaction of the Assistant or Deputy Commissioner of Customs as the goods, which were originally imported;Goods have entered for export either on a shipping bill through sea or air, or on a bill of export through land, or as baggage, or through post and the proper officer should have permitted clearance of the goods for export;Goods are entered for export within two years from the date of payment of import duty (period can be extended on sufficient grounds being shown). It is to be noted that the time limit of two years has to be considered from the date of payment of import duty. Hence, it does not mean the date of importation.The Central Government vide the powers conferred under section 74, has notified the Re-export of Imported goods (Drawback of Custom Duties) Rules, 1995. These rules prescribes the procedure for claiming drawback and procedure for claiming drawback on re-exports by Post and through other modes.Rate of DrawbackAs regards to the rate of drawback, the Central Government is empowered to fix the rate having regard to the duration of use, depreciation in value and other relevant circumstances prescribed by a notification. In this behalf, the Government has issued notification no.19/65 dated 6-02-1965 as amended. As per this notification, drawback is not permissible for certain specified goods, such as wearing apparel, tea chests, exposed cinematographic films passed by Film Censor Board, unexposed photographic films, paper and plates and x-ray films. Also, in respect of motor vehicles imported for personal and private use the Drawback is calculated by reducing the import duty paid according to the laid down percentage for use for each quarter or part thereof, but upto maximum of four years.Following table enumerates the reduced rate of duty drawback having regard to the duration of use:Length of period between the date of clearance for home consumption and the date when the goods are placed under Customs control for exportPercent of drawback1Not more than 3 months95%2More than 3 months but not more than 6months85%36- 9 months75%49-12 months70%512- 15 months65%615-18 months60%7More than 18 monthsNilDrawback on imported materials used in the manufacture of export goods under Section-75Drawback under section 75 is different from drawback under section 74. As per section 75, Central Government is empowered to allow duty drawback on export of goods, where the imported materials are used in the manufacture of such goods. Unlike drawback of a portion of the customs duty paid on imported goods, here the main principle is that the Government fixes a rate per unit of final article to be exported out of the country as the amount of drawback payable on such goods. Presently, these rates are of two types, viz., ALL INDUSTRY RATE and BRAND RATE. Further, the drawback amount depends upon the following factors:Mode of manufacture,Quantum of raw material required,Average content of duty paid articles in the final product,Standardisation of final product conforming to these norms.It is important here to note that Drawback is also eligible when imported materials and / or excisable materials are used in the manufacture of goods to be exported. Such provisions are given under Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 [Drawback Rules]. The Central Government have framed the Drawback Rules, pursuant to the powers given under Section 37 of the Central Excise Act, 1944. According to such rules, drawback is eligible for both customs duty as well as excise duty, subject to the non availment of Cenvat credits. However, duty drawback of customs component is eligible irrespective of whether exporter has availed of Cenvat or not.Importance of shipping bill for claiming duty drawbackShipping bill is an essential document for claiming duty drawback. In case of exports under e-Shipping bill, the Shipping bill itself is regarded as claim for duty drawback. Whereas in case of manual export, the triplicate copy of the Shipping bill is treated as the drawback claim. Further, there are certain other formalities and documents required apart from the Shipping bill.Non applicability of Drawback schemeDuty Drawback is not allowed in the following cases as per the Rule 3 of the Drawback Rules:if the said goods, except tea chests used as packing material for export of blended tea, have been taken into use after manufacture;if the said goods are produced or manufactured, using imported materials or excisable materials or taxable services in respect of which duties or taxes have not been paid; or;on jute batching oil used in the manufacture of export goods, namely, jute (including Bimlipatam jute or mesta fibre), yarn, twist, twine, thread, cords and ropes;if the said goods, being packing materials have been used in or in relation to the export of -jute yarn (including Bimlipatam jute or mesta fibre), twist, twine, thread and ropes in which jute yarn predominates in weight;jute fabrics (including Bimlipatam jute or mesta fibre), in which jute predominates in weight;jute manufactures not elsewhere specified (including Bimlipatam jute or mesta fibre) in which jute predominates in weight.e. on any of the goods falling within heading 1006 or on wheat falling within heading 1001 of the First Schedule to the Customs Tariff Act, 1975.Besides the above, duty drawback is not admissible in the following cases:if the drawback entitlement is less than Rs..50/- [Sec-76(1)(c) of the Customs Act, 1962]if the market price of export goods is less than the amount of drawback due thereon [Sec-76(1)(b) of the Customs Act, 1962]if product is manufactured partly or wholly in bond under section 65 of the Customs Act, 1962 because the duty drawback is not admissible in case of goods manufactured from duty free inputsif the product is manufactured and exported by a 100% EOU in terms of the relevant Import policy; However, as per para 6.11 of FTP 2009-14, in case of deemed exports, if the DTA supplier does not claim export benefits, then the EOU/EHTP/STP/BTP Unit shall be eligible to claim such benefitsif the product is manufactured and/ or exported by any units in the FTZ/ EPZ or SEZ for the above reasonif the goods are manufactured and exported in terms of Rule 18 and 19(2)of the Central Excise Rules, 2021 as these rules prfor rebate of duty, and export in bond on goods on which duty has not been paidif the goods exported to Burma, Nepal, Bhutan, Tibet or Sinkiang as specified in Notification No. 208/77-Cus., dtd 1-10-1977if the amount of drawback is less than 1% of FOB value (except where the amount of drawback is more than Rs..500/-) as laid down in Rule 8 of Drawback Rulesthe export value of the goods in the Bill of Export or Shipping Bill is less than the value of imported materials used in the manufacture of such goods or is not more than such percentage of the value of such imported material as the Central Government may notify in this behalf [Rule 8 of Drawback Rules]where any drawback has been allowed on any goods under section 75 and the sale proceeds in respect of such goods are not received by or on behalf of the exporter in India within the time allowed under the FEMA, such drawback shallbe deemed never to have been allowed and the Central Government may, by rules made under sub-section (2), specify the procedure for the recovery or adjustment of the amount of such drawback. [Proviso to Sec 75 of the Customs Act]ConclusionDuty drawback is a beneficial provision given under the Customs Act, 1962 and the Drawback Rules, 1995. This financial benefit is in addition to the other benefits given under Foreign Trade Policy [FTP]. However, drawback is not allowed when the assessee opts for Advance Authorisation scheme [i.e., purchase of inputs without payment of duty]. Therefore, it is advisable to analyse all the beneficial options before choosing any particular option.
Is there duty drawback for service exports?
The Duty Drawback Scheme introduced for incentivizing and facilitating exports has been continued under the GST regime. This drawback scheme is an export beneficiation where either a part, or in some cases the entire customs and central excise duties levied on inputs used in manufacturing export goods and Service tax on services used for export of such goods are refunded by the Central Government to the exporter.The exports that are eligible under this scheme are:export of goods which were imported into India as such, orexport of goods which were imported into India for use for identified purposes andexport of goods which are manufactured or produced out of materials which were either imported or indigenously procured. For more: Duty Drawback Scheme and GS
What are the export benefits under GST and how can we claim it?
Well, in the area of exports, the government has maintained the same benefits what ever was available earlier.The export of goods or services is considered as a zero-rated supply. GST will not be levied on export of any kind of goods or services.A duty drawback was provided under the previous laws for the tax paid on inputs for the export of exempted goods. Claiming the duty drawback was a cumbersome process.Under GST, the duty drawback would only be available for the customs duty paid on imported inputs or central excise paid on certain petroleum or tobacco products used as inputs or fuel for captive power generation.Drawback:No amendments have been made to the drawback provisions (Section 74 or Section 75) under Customs Act 1962 in the GST regime. Hence, the drawback scheme will continue in terms of both section 74 and section 75.Option of All Industry Rate (AIR) as well as Brand Rate under Section 75 shall also continue. Drawback under Section 74 will refund Customs duties as well as Integrated Tax and Compensation Cess paid on imported goods which are re-exported.At present Duty Drawback Scheme under Section 75 neutralises Customs duty, Central excise duty and Service Tax chargeable on any imported materials or excisable materials used or taxable services used as input services in the manufacture of export goods.Under GST regime, Drawback under Section 75 shall be limited to Customs duties on imported inputs and Central Excise duty on items specified in Fourth Schedule to Central Excise Act 1944 (specified petroleum products, tobacco etc.) used as inputs or fuel for captive power generation.A transition period of three months is also being provided from date of implementation of GST i.e. 1.7.2017. During this period, existing duty drawback scheme under Section 75 shall continue. For exports during this period, exporters can claim higher rate of duty drawback (composite AIR) subject to conditions that no input tax credit of CGST/IGST is claimed, no refund of IGST paid on export goods is claimed and no CENVAT credit is carried forward.A declaration from exporter and certificate from jurisdictional GST officer in this regard has been prescribed in the notification related to AIRs. This will prevent double availement of neutralisation of input taxes.Similarly, the exporter can claim brand rate for Customs, Central Excise duties and Service Tax during this period. Exporters also have the option of claiming only the Customs portion of AIR and claim refund/ITC under GST laws.Secondly, it could be possible that export goods may be manufactured by using both Central Excise/Service Tax paid and CGST/IGST paid inputs and inputs services or only CGST/IGST paid inputs and inputs services.In such situation, an exporter opting to claim composite rate of duty drawback during transition period has to give specified declaration and produce certificates as stated above so that he does not claim double benefit.Exporter will have to reverse the ITC if any availed and also ensure that he does not claim refund of ITC/IGST. Requisite certificate from GST officer shall also be required to this effect. As mentioned earlier, exporters will also have option of claiming credit/refund of CGST/IGST and claim Customs rate drawback.Refund of IGST paid on exports and Export under Bond scheme:Under GST regime exports would be considered as zero-rated supply.Any person making zero rated supply (i.e. any exporter) shall be eligible to claim refund under either of the following options, namely:(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or(b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 (Refunds) of the Central Goods and Services Tax Act or the rules made there under (i.e Refund Rules 2017).For the option (a),procedure to file refund has been outlined in the Refund Rules under GST. The exporter claiming refund of IGST will file an application electronically through the Common Portal, either directly or through a Facilitation Centre notified by the GST Commissioner. The application shall be accompanied by documentary evidences as prescribed in the said rules.Application for refund shall be filed only after the export manifest or an export report, as the case may be, is delivered under section 41 of the Customs Act, 1962 in respect of such goods.For the option (b),the shipping bill filed by an exporter shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India and such application shall be deemed to have been filed only when the person in charge of the conveyance carrying the export goods duly files an export manifest or an export report covering the number and the date of shipping bills or bills of export and the applicant has furnished a valid return.For both option (a) and (b) exporters have to prdetails of GST invoice in the Shipping bill. ARE-1 which is being submitted presently shall be dispensed with except in respect of commodities to which provisions of Central Excise Act would continue to be applicable.These are the overall benefits with reference to Exports.R2AThank you?
What is Bank of Baroda scam?
Bank of Baroda, India’s second largest state-owned lender is embroiled in a Rs. 6000 crores foreign exchange (FOREX) scam. Though, the racket was first unearthed at the Ashok Vihar branch of Bank of Baroda, it has turned out to be a much bigger scam involving other branches and banks too.Bank of Baroda noticed unusual transaction from its Ashok Vihar branch in Delhi. The branch had received permission to do FOREX transactions only in 2021. Within a year, it had received FOREX business of around Rs. 21529 crores. Therefore, the bank alerted Government agencies in July 2021. The CBI and the Enforcement Directorate (ED) started investigating the case.The scam involves illegal remittance of around 6172 crores to Hong Kong and Dubai between August 2021 and August 2021. The amount of each transaction was kept less than Rs. 1,00,000 to avoid attracting attention (if remittance is more than 1 lakh, it is detected by the bank’s software and it has to intimate it to RBI).There were mainly two ways in which the alleged money-laundering took place. The account holders used either or both to commit fraud.Advance payments of importsThe accused opened 59 current accounts in Ashok Vihar branch under the names of various dummy/ non-existent companies. They deposited money in these accounts to be transferred to companies in Hong Kong and Dubai (also fake). This money was transferred ostensibly for the purpose of ‘advance payments of imports‡ to the companies in Hong Kong and Dubai. But, these imports never took place.This channel was allegedly used to send the black money earned in India abroad through formal banking channel.It has to be noted that Bank of Baroda contended that only 6.7% of the 6000 crores remitted abroad was deposited directly in cash in these 59 accounts. The remaining amount was transferred through accounts in other banks. This points towards a possible involvement of different banks.Exploiting duty drawback schemeIn the second method, dummy companies were opened in Hong Kong. The Indian exporters exported the goods to their own dummy company in Hong Kong and inflated their export bills.The rationale behind the whole transaction was that the exporter wanted to exploit the duty drawback scheme of the Government. This scheme was started by the Government to incentivise exports. So, if a company or individual exports goods, he gets refund of the following taxes paid on the raw materials used in the production:Customs duty paid on imported raw material.Excise duty paid on raw material manufactured in Indiaand Services tax on input servicesAs the exports were overvalued, the exporter got duty drawback from the Government which were higher than the customs, excise, service tax etc. actually paid on inputs. This led to a loss to our national exchequer.This transaction served another purpose too. It enabled exporters to bring back foreign money stashed abroad disguised as payments for exports.For instance: If a good worth Rs. 100 is actually invoiced at Rs. 150, then the dummy company in Hongkong will sell the goods at Rs. 100, but pay Rs 150 to the exporter in India. In this way, via dummy company, the exporter can bring back extra Rs. 50 worth of black money stashed abroad to India.Also, the company will get duty drawback on these inflated export bills.The scam has engulfed other banks too. About 20 of the 59 current account holders in Bank of Baroda had accounts in HDFC bank also. In fact according to the investigators these account holders could have accounts with 30 other banks also.This fraud raises concerns about the lax governance in public sector banks of India. There is no internal fraud detection mechanism in most banks. Banks rely on traditional channels, such as audits and internal whistle-blowers to detect fraud. Sophisticated tools such as computer analytics and fraud detection algorithms are practically non-existent. The banks neglected to follow proper KYC norms. They failed to verify whether the companies actually existed or not.Another issue of concern is that it is not just negligence on the part of banks. The scam of such a large magnitude cannot take place without active connivance by some bank officials. In fact, Bank of Baroda has dismissed 2 senior officials and ED has arrested at least 6 people as of now in connection with the scam.The Central Vigilance Committee (CVC) has stepped in and has sought a report from CBI and Bank of Baroda on the scam. It wants to take steps for the systematic overhaul in the banking system to enable early detection of such frauds in the future.Source: Economyria.com
What is the procedure to get duty drawback in India?
claim Draw back of exports in India:-If shipping bill was filed at a customs location where in no EDI facility is available, triplicate copy of shipping bill with certain documents to support the application for draw back need to be filed. The details of such documents have been mentioned in drawback rules 1995 of Customs department. You can approach respective customs department and collect details of documents under the product which you intend to claim draw back. If such requisite information/documents are not filed, such application for drawback will be returned to exporter advising to reapply with required documents. However, the shipment will not be stopped due to this reason.If export documents are filed by electronically, the exporter or his authorized customs broker files necessary information about draw back with required documents at the time of filing documents for export procedures and formalities. In such cases, the amount of drawback is directly credited with exporter’s bank by customs authorities.If the amount of drawback is not credited with exporter’s bank within a stipulated period of time after export, he can contact customs department.
How much taxation is involved in the export of food products and spices from India?
Government encourages for export of product and service and not export of taxes. Therefore , there is no taxes like VAT, CST,GST, excise duty and other indirect taxes on export of goods or service except some essential goods/ products.You have to pay Custom Duty Tax on export product if Your Product is covered under Second Schedule of Custom Duty Tariff Act , 1975 . Specifying the product nature/type and their applicable rate of tax . However if such good are mentioned in that tariff , consult a C.A for more information and their compliance. As per my knowledge , Only Basic Custom Duty are charged and NO Excise Duty) , VAT / CST/GST) etcHowever, the income earned through export is liable to Income tax except when the export is done through SEZ or export processing Zone.There are also various Income Tax benefit to S.E.Z business in terms of Tax Holidays , etcThere is also Duty Drawback (Credit for such Tax paid) i.e Basic Custom Duty is allowed as credit .Government is giving incentives to many product for exports like duty drawback, Merchandise Exports from India Scheme, Service from India.Except for the products mentioned in The Second Schedule of Export Tariff, no taxes are to be paid for exporting, rather taxes such as sales tax etc. are reimbursed by the govt. under the duty draw-back scheme , to promote exports.Income Tax is to be paid on the net income (net of all expenses and cost of goods exported, during the year, as per income tax rules) earned in the export transaction.Hope its helpful.
Is GST helpful for raw materials imports and exports?
Impact to Export and Import Industry After Introduction of GST in relation to raw materials imports and exportsExport schemes such as MEIS and SEIS will consolidate Export IndustryAs far as the schemes are considered in India, the Merchandise Exports from India Scheme (MEIS) and the Services Exports from India Scheme (SEIS) covered under the MSME Registration that will sustain even after the execution of the GST. Subject to these schemes, exporters with a conclusive amount of turnover are furnished with duty credit scrips. These scrips will empower you for the exemption of duties paid on the import of raw materials. The amount of exemption is explicit as a percentage of the total turnover of the exporter. This will lead to increased benefits to the exporters.Looking Towards the duty drawback schemeAs far as the duty drawback scheme is concerned, the major advantage of this scheme is that the exporters can easily get the refund of the customs and excise duties that are paid on the imported items. The GST legislation has specified the limitation on some of the imported items. So, inference can be drawn that you will get refund of the taxes paid on both imported as well as domestic inputs. This will ultimately benefit the small exporters who are placed in the remote areas where availability of raw material become a headache for these traders.Refund of Duty :As far as the new tax regime is considered, the tax which is paid during the import will be available as a credit under the “Import and Sale” model. Also, the refund of SAD is available after complying with rules under the Indian law.