Centre modifies export incentive schemes post GST

Posted by Daily Shipping Times on 04-07-2017        Tweet

NEW DELHI: The Centre has modified existing export incentive schemes, removing most exemptions provided on input taxes to align them with the Goods and Services Tax regime which was rolled out on July 1.

Exporters importing inputs, including machinery under popular schemes such as Advance Authorisation and Export Promotion Capital Goods (EPCG) scheme, without paying import duties (customs duty, countervailing duty and special additional duty) up to a given limit, will now have to pay GST on it, and later apply for refund.

“Under the GST regime, no exemption from payment of Integrated GST (IGST) and compensation cess would be available for imports under Advance Authorisation. Importers would need to pay IGST and take input tax credit as applicable under GST,” stated a trade notification issued by the Directorate General of Foreign Trade (DGFT) on Friday, modifying provisions under the Foreign Trade Policy (2015-20).

However, imports under Advance Authorisation will continue to be exempted from payment of basic customs duty, additional customs duty and education cess.

Exemptions will also be provided wherever penal duties, such as anti-dumping, safeguard and transition product-specific safeguard duty, are applicable.

The notification added that under the EPCG scheme (Chapter 5 of the FTP), too, importers of capital goods will need to pay IGST and take input tax credit.

Scrips curtailed

Benefits under the Merchandise Export from India Scheme (MEIS) and the Services Export from India Scheme (SEIS), which provide exporters with duty-free scrips based on the value of their exports, have also been curtailed.

“The scrips cannot be used for payment of IGST and GST compensation cess in imports, and CGST, SGST, IGST and GST compensation cess for domestic procurement,” the notification stated.


Imports by Export Oriented Units (EOUs), which were allowed duty-free imports of goods for their authorised operations, will now get exemption on only customs duty.