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Export Incentive

Legal Features

India's Export Incentives: What You Should Know

By 2025, India aspires to be a $5 trillion economy. One of the prerequisites for achieving this goal is tripling its exports to $1 trillion by the same year. Attaining that objective will be contingent on the government's readiness to promote the exporting community of the country– mostly through export schemes that offer a range of financial and non-financial incentives.

Meaning of export incentive

Export incentives are benefits that exporters get each year in exchange for bringing in foreign currency and rewarding them for the expenditures associated with exporting products and services.

Export incentives may include the following:

  • Subsidies that result in a decrease in export pricing
  • Duty exemptions (which provide the duty-free importation of materials for export manufacturing) and duty remissions (which facilitate post-export replenishment of duty on inputs used in export products)
  • Credit facilities, for example, low-interest loans
  • Financial guarantees, for example, protections for failed loans
  • Export incentives in India are designed to complement the government's flagship
  • "Make in India" and "Atmanirbhar Bharat" (Self-reliant India) initiatives.
  • The former seeks to turn India into a manufacturing hub, while the latter pushes for self-reliance.
  • These incentives are comprehensively outlined in an official document referred to as the foreign trade policy, which is a collection of rules and strategies for the import and export of products and services.

Why is it necessary to provide export incentives?

China's export success is due to a plethora of government incentives (including large tax refunds) for companies to deliver a large chunk for overseas markets. Export incentives assist nations and exporters in the following ways:

  • They are a source of foreign exchange. Countries require foreign exchange reserves to facilitate international trade, settle for imports, repay foreign debts, and provide a buffer against financial collapse, currency devaluation, and other adverse occurrences.
  • They support employment creation by assisting businesses in growing and expanding their employees.
  • They result in increased earnings (especially for skilled, qualified and city workers in India, according to the World Bank's report).
  • They promote self-sufficiency by minimising dependency on imported products.

Export Incentives – Their Features and Advantages

Schemes for export promotion

Remission of Duties or Taxes on Export Products (RoDTEP): The scheme compensates exporters for embedded central, state, and municipal taxes and duties that were not previously rebated. Refunds are credited to an exporter's customs ledger account and can be used to pay import duties or passed to other importers.

Service Exports from India Scheme(SEIS): This scheme provides incentives to exporters of qualified services in the form of duty credit scrips at a rate ranging from 3% to 7% of net foreign exchange generated.

Merchandise Exports from India Scheme (MEIS):

In this scheme, the exporters of mentioned products to mentioned markets get transferable duty credit scrips based on the export's realised Free On Board (FOB) value in free foreign currencies at rates ranging from 2% to 7%. Capital goods used in pre-production, production, and post-production can be imported duty-free under EPCG — the programme is also known as Zero Duty EPCG. Integrated GST (IGST) and compensating cess are likewise free from duty.

Duty exemption/remission schemes

Advance Authorisation (AA):

It allows duty-free imports of raw materials/inputs directly integrated into export-ready items, provided that the finished product adds 15% value. The scheme is applicable to all types of fuel, catalysts, and packaging materials utilised during the production process.

Advance Authorisation for Annual Requirement:

Exporters may also request advance authorization on a requirement-by-requirement basis under AA. Only exporters who have a "status holder" certificate or who have proven prior export performance are eligible.

Duty-Free Import Authorisation (DFIA): As with AA, this system permits the duty-free importation of inputs. Unlike AA, however, imports under DFIA may be done only post the export has been finished, the scheme is limited to SION-covered items, requires a 20% value addition, and exempts only from basic customs tax. A DFIA licence is transferrable and valid for 12 months. One may be obtained by submitting an application to the port's regional authority within 12 months of the date of export.

GST benefits- Under the GST framework, exporters are eligible for the following refunds and benefits:

IGST refund: All exports are liable to IGST, which may be reclaimed by submitting a formal customs refund request.

LUT Bond Scheme: Exporters might avoid paying GST on goods/services by submitting a Letter of Undertaking (LUT) bond. An exporter who is registered for GST can submit the paperwork by logging into their profile on the GST website. This approach eliminates the hassle associated with claiming and obtaining a refund.

1% GST  benefit for merchant exporters - Merchant exporters are eligible to purchase products destined for export at a 0.1 per cent subsidised GST rate from a national supplier.

Status Holder Certificate: The DGFT awards exporters are considered to have made a significant contribution to India's foreign trade star ratings of one, two, three, four, and five stars. Ratings are based on export performance during the last three fiscal years. For five years, or until March 31, 2021, the certificate is valid (when the current foreign trade policy lapses).

Non-financial benefits include the expedited customs clearance, priority in payment of import duties, exemptions from providing bank guarantees, obligatory negotiation of papers with banks, and guaranteed remittance (GR) processes. (GR is a method used by the RBI to regulate foreign exchange).

Market Access Initiative (MAI):

This programme attempts to identify new markets and to assist export promotion operations in such markets. Market studies, publicity campaigns, brand promotion, showroom/warehouse establishment, participation in international trade fairs, reimbursement of airfare for international events, and reimbursement of registration fees paid to the importing country in the case of biotechnology, pharmaceuticals, chemicals, farm, and food products. MAI benefits are distributed through Export Promotion Councils.

Towns of Export Excellence: Rather than directly benefiting exporters, this programme recognises towns that export items worth Rs 750 crore or more as towns of export excellence. It gives financial support to recognised associations within these communities in accordance with MAI criteria in order to help them realise their export potential.

Likewise, there are several other schemes that provide the exemption from tax on the export of goods and services.

Get the best service for the Export Incentives

We, at Careful Counting, provide the best consultation for getting the benefits of such export incentives.

Provide us with some basic documents, and we will get started right away.

Minimum Requirements

  • House property
  • Copy of old ITR which is Earlier Filed
  • Income Statement
  • Balance sheet
  • TDS Certificate
  • TDS Return (all Quarters)
  • Audited Balance Sheet with all schedules

Basic Documents

Books of Accounts

  • PAN card/Pan Number
  • Tax payment challans (Self-assessment, advance tax, if you have deposited the same
  • TDS Deduction Sheet with all deductee details as like PAN, Name, Date of Payment, Amount Credited, etc.
  • All Bank account information

Other Documents

  • For TDS deducted in Apri to February: 7the Day of Next Month of deduction of month
  • For TDS deducted in March: 30th April


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