Page 23 - Chemexcil NEWS August - September 2017 for web
P. 23
NEWS ARTICLE
1. EXPORT INCENTIVE SCHEMES UNDER THE FTO – ARE EXPORTS STILL
‘INCENTIVIZING’ UNDER THE GST REGIME?
Under the GST regime, MEIS and SEIS scrips can payments of customs duties on the import
be used only for payment of Basic Customs Duty of goods, excise duties on certain domestic
(BCD). procurement of goods and service tax on the
receipt of specified services.
The Government of India has always endeavoured
to encourage and incentivise exports, and it has Under the GST regime, MEIS and SEIS scrips
been an avowed policy to export goods and can be used only for payment of Basic Customs
services and not taxes and duties. The Ministry of Duty (BCD), and cannot be used for payment of
Commerce, Government of India has consistently Integrated GST (IGST) and GST Compensation
formulated schemes aimed at diversifying Indian Cess leviable on imports, and Central GST (CGST),
exports and creating a stable policy environment- State GST (SGST), IGST and GST Compensation
Foreign Trade Policies (FTP). The FTP 2015-20 Cess on domestic procurements. Therefore GST
announced various schemes (some new and will have to be paid in cash by importers, resulting
others modified existing schemes) as a step in cash outflow at the point in time of import,
towards the Prime Minister’s much touted ‘Make although credit of such taxes paid in cash would
in India’. be available to them. One moot aspect also is that
the Government has assured refund for taxes paid
On June 30th, 2017 the Directorate General of in exports within 7 days (upto 90%), yet, it does
Foreign Trade (DGFT) issued a Trade Notice not consider the life-cycle of production/service
amending the scope, applicability and procedural rendition from the point of import!
aspects of some of the FTP schemes, in view
of and to align with the new GST regime that The Advance Authorization (AA) scheme and
India embraced from 01st July, 2017 – all these Duty-Free Import Authorization (DFIA) Scheme
changes took effect from July 1st, 2017. Are these allow duty free import of inputs which are
FTP schemes still incentivising exports after the physically incorporated in the resultant exports
amendments? Some of the key amendments to manufacturers/exporters including those
scheme-wise are discussed below: associated with supporting manufacturers,
subject to certain conditions.
Merchandise Exports from India Scheme (MEIS)
and Service Exports from India Scheme (SEIS) are Under the GST regime, while the exemption
focussed on boosting merchandise and service from payment of Customs duties, including BCD,
exports from India. The rewards granted under Additional Customs Duties Anti-dumping Duty,
these schemes are that of duty credit scrips. Safeguard Duties and Customs Cesses continue,
Previously, the scrips could be used for making there is no exemption from payment of IGST and
GST Compensation Cess for imports under AA/
DFIA. Companies making local procurements will
have to pay applicable GST using an Invalidation
Letter of AA/DFIA.
Therefore, there can be seen to have occurred a
paradigm shift in pattern and manner of business
transactions. Previously, an exporter need not
have funded the tax portion of imports in the
21 August-September-2017
