Page 261 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes The Directorate of Duty Drawback is responsible for fixing and announcing rates of drawback
from time to time. There are two types of drawback rates:
All Industry Rates: These are published by the Directorate every year. These are fixed for
a particular class of products manufactured and take into account the averages of input
consumption, taxes and duties paid, wastages, and FOB prices of exported products. These
rates are prescribed in value terms like percentage of FOB value or in quantity terms like
per kg./per tonne etc.

Brand/Special Brand Rates: These are special rates allowed to a specific manufacturer for
a particular product. These are usually decided for those exporters who approach the
Directorate with special requests either in cases where there is no industry rate available
or where the existing rate does not provide adequate refund of duties paid. The Directorate
on its own discretion may decide special rates under such circumstances.

A different shipping bill bearing green colour, called Green Shipping Bill needs to be used by
the exporter at the time of shipment, if the item being exported is eligible for drawback claim.
The Customs official will provisionally accept the drawback claim at the time of shipment by
duly verifying the shipping bill. However, the claim is finally settled by the Customs Office
later.
Many of the Customs Houses in India like Delhi, Mumbai, Kolkata, Chennai, Hyderabad and
Chandigarh have EDI (Electronic Data Interchange) Systems in operations these days. The
drawback claims under the EDI system get automatically settled and the amount of drawback
gets transferred to the drawback account of the exporter. The State Bank of India and Punjab
National Bank have facilities for exporters to open such accounts at their branches/extension
counters functioning at various ports/airports.

In cases where the settlement of drawback claims take time and huge amounts are blocked, the
exporter can approach his bank and take a loan against the pending receipt of drawback amount.

12.5 Income Tax Concessions

Till about a few years ago, export income in India was totally exempt from income tax. However,
the same was withdrawn in a phased manner. At present, no income tax benefit is available to
the exporters under Section 80 HHC.
Under Section 10A of the Income Tax Act, 1961 undertaking operating from a Special Economic
Zone (SEZ ) that manufactures articles/things or computer software are eligible for deduction of
export profits. For undertaking commencing operation from the notified Special Economic
Zones (SEZs) on or after 1st April, 2002, the tax holiday is available for a total period of seven
assessment years, comprising of a deduction of 100% of export for five years followed by
deduction of 50% of export profits for subsequent two years.

Self Assessment

Fill in the blanks:
1. ............................. in India has been replaced by Value Added Tax (VAT).
2. ................... is a tax on such value addition at each stage. It provides for set off of tax paid on
purchases at each point of sale.
3. For exports, the goods exported are ............................ rated under VAT.
4. ......................... is a tax on production or manufacture of goods.

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