Sunday, September 19, 2010
SPECIAL DUTY FREE SCHEMES FOR EXPORTERS AND SERVICE PROVIDERS:
TARGET PLUS SCHEME FOR EXPORTERS:
All Star Export Houses including Status Holders which have achieved a minimum export turnover in free foreign exchange of Rs.10 crores in the previous licensing year are eligible for consideration under this Scheme at the following rates:
Ø Percentage incremental growth: 5% Duty Credit Entitlement as a
20% and above but below 25%: percentage of the incremental growth
Ø 25% or above but below 100%: 10%
Ø 100% and above: 15% of 100%
Incremental growth beyond 100% will not qualify for computation of duty credit entitlement.
Duty Credit may be used for import of any inputs, capital goods including spares, office equipment, professional equipment and office furniture provided they are freely importable.
DUTY FREE CREDIT ENTITLEMENT CERTIFICATE SCHEME FOR SERVICE PROVIDERS:
Ø All service providers who have a total foreign exchange earning of at least Rs.10 Lakhs in the preceding or current financial year are eligible to qualify for a duty credit entitlement. For individuals foreign exchange earned criteria is Rs.5 lakhs in the preceding financial year.
Ø All service providers other than hotels and restaurants are entitled to duty credit equivalent to 10% of the foreign exchange earned by them in the preceding financial year.
Ø Hotels approved by Department of Tourism and other Service Providers in the tourism sector registered with the Department of Tourism are entitled to duty credit equivalent to 5% of the foreign exchange earned by them in the preceding financial year.
Ø Stand-alone restaurants are entitled to 20% duty credit of the foreign exchange earned by them in the preceding financial year.
Ø Capital goods including spares, office equipment and professional equipment, office furniture and consumables related to the main line of business of the applicant can be imported.
Ø Duty Credit and the goods imported are non-transferable.
VISHESH KRISHI UPAJ YOJANA:
Ø Exporters of fruits, vegetables, flowers, minor forest produce, dairy, poultry and their value added products are entitled for duty credit scrip equivalent to 5% of the FOB value of exports for each licensing year commencing from 1st April, 2004. However, poultry, dairy and their value added products shall qualify for benefits in respect of exports effected with effect from 1st April, 2005.
Ø The scrip and the items imported are freely transferable.
Ø Duty Credit may be used for import of inputs or goods including capital goods which are free importable.
SPECIAL SCHEMES FOR HANDLOOMS, HANDICRAFTS, GEMS AND JEWELLERY, LEATHER AND FOOTWEAR AND MARINE SECTORS:
HANDLOOMS:
Ø Duty free import entitlement of specified trimmings and embellishments is 5% of FOB value of exports during the previous financial year.
Ø Duty free import entitlement of hand knotted carpet samples is 1% of FOB value of exports during the preceding financial year.
Ø Duty free import of old pieces of hand knotted carpets on consignment basis for re-export after repair permitted
HANDICRAFTS:
Ø Duty free import entitlement at 5% of FOB value during previous financial year of trimmings and embellishments. CVD is exempt on duty free import of trimmings, embellishments and consumables.
GEMS AND JEWELLERY:
Ø Import of gold of 8k and above permitted subject to the import being accompanied by an Assay Certificate specifying the purity, weight and alloy content.
Ø Duty free import entitlement of consumables for metals other than Gold, Platinum at 2% of FOB value of exports during the previous financial year
Ø Duty free import entitlement of commercial samples is Rs.3 Lakh.
Ø Duty free reimport entitlement for rejected jewellery is 2% of FOB value of exports.
Ø Cutting and polishing of gems and jewellery is treated as manufacturing for the purposes of exemption under section 10A of the Income Tax Act.
LEATHER AND FOOTWEAR:
Ø Duty free import entitlement of specified items is 5% and for trimmings, etc. 3% of FOB value of export during the preceding financial year. This will also cover packing material, such as printed and non-printed showboxes, small cartons made of wood, tin or plastic materials.
Ø Machinery and equipment for effluent treatment plants exempt from basic customs duty.
Ø CVD exempt on lining and interlining material , raw, tanned and dressed fur skins.
MARINE SECTOR:
Ø Duty free import of specialized inputs/chemical and flavouring oils permitted upto 1% of FOB Value of preceding financial year’s export.
Ø Concessional customs duty on import of monofilament long line system for tuna fishing.
CASH INCENTIVES SCHEMES:
DUTY ENTITLEMENT PASSBOOK SCHEME:
Ø Objective is to neutralize the incidence of customs duty on the import content of the export product. Neutralisation is provided by way of grant of duty credit against the export product.
Ø An exporter may apply for credit as a specified percentage of FOB value of exports made in free convertible currency as per the DEPB Schedule announced from time to time. At present, DEPB rates have been notified during May, 2005 and amendments, clarifications are provided from time to time through Public Notices.
Ø Duty credits are available for import of raw materials, intermediates, components, parts, packaging material, etc. Additional customs duty, if any is payable in cash as well.
Ø DEPB and/or items imported against it are freely transferable.
DUTY DRAWBACK SCHEME:
Ø Ministry of Finance notifies rates of duty drawback for various export products with effect from 1st June every year. Exporters exporting products covered by Duty Drawback Schedule are entitled to duty drawback at the specified rates and credit of such rates are made in the bank accounts of the concerned exporters on the “LET EXPORT” date.
Ø Wherever, exporters wish to have duty drawback rates fixed, they can apply to the Directorate of Drawback, Ministry of Finance, New Delhi
REFUND OF CENTRAL EXCISE DUTY AND OTHER TAXES:
Ø Central Excise Tariff permits refund of central excise duty paid on the inputs only after these have been physically incorporated in the export products, products exported and free foreign exchange realized. Claims are to be submitted to the concerned central excise authority alongwith required documents and the bank realization certificate.
Ø Other levies like purchase tax, VAT, etc. are refundable to export oriented units or to those who are supplying goods to deemed exports units.
SUBSIDY PACKAGES FOR GROWTH CENTRES:
Ø Government of India
Ø 100% exemption from central excise duty is available.
Ø 100% exemption from income tax for first 5 years is available.
Ø One time cash subsidy upto 15% of investment in plant and machinery is available subject to a maximum limit of Rs.30 Lakhs.
FINANCIAL ASSISTANCE SCHEMES:
Various schemes like airfreight subsidy scheme for export of horticulture produce from NE States and J&K are available.
There are various other schemes being regulated by Ministry of Agriculture and Cooperation (through National Horticulture Board), Ministry of Food Processing Industry.
MARKET DEVELOPMENT ASSISTANCE SCHEME:
It is intended to provide financial assistance for a range of export promotion activities implemented by export promotion councils, industry and trade associations on a regular basis.
As per the revised guidelines with effect from 1st April, 2004, assistance is available for exporters with annual export turnover upto Rs.5 Crores.
Further, assistance for participation in Trade Fairs abroad and travel grant is available to such exporters if they travel to countries in one of the four Focus Areas, such as Latin America, Africa, CIS Region, ASEAN Countries, Australia and New Zealand.
For participation in trade fairs, etc. in other areas financial assistance without travel grant is available.
MARKET ACCESS INITIATIVE SCHEME:
Following activities are eligible for financial assistance under this Scheme:
Ø To identify the priorities of research relevant to Department of Commerce and to sponsor research studies consistent with the priorities;
Ø WTO studies for evolving WTO camptible strategy;
Ø To support Export Promotion Councils, Trade Promotion Organisations in undertaking market studies, surveys for evolving proper strategies.
To support marketing projects abroad based on focus product focus country approach. Under marketing projects, the following activities are funded:
Ø Market Study: 75% of the total cost and 25% to be borne by the Eligible Agencies. However, for studies assigned by the Department of Commerce for the cause of export promotion, 100% assistance is provided. Maximum ceiling for each study is Rs.75 Lakhs.
Ø Opening of Showrooms: 75%, 50% and 25% of leasing/rental charges in the first, second and the third year, respectively subject to a ceiling of Rs.50 Lakhs for each market/product per annum.
Ø Opening of Warehouses: 75%, 50% and 25% of leasing/rental charges in the first, second and the third year, respectively subject to a ceiling of Rs.50 Lakhs for each market/product per annum.
Ø Display in international departmental stores: 50% of rental charges of display space would be provided as assistance subject to a ceiling of Rs.50 lakh per annum/each product.
Ø Publicity Campaign and Brand Promotion: 50% for two years in a particular market subject to a ceiling of Rs.50 lakhs per annum/per market. For third year, after a review of the result of the project in the first two years, assistance can be considered.
Ø Participation in Trade Fairs, Buyer-Seller Meets etc. abroad: 2/3rd of the actual expenditure. The expenditure on TA/DA to be met by each participant. Ceiling is Rs.50 Lakh for each fair for venue cost, publicity cost for the event, cost of the catalogues and other material, translation and interpreters’ charges and any other component approved by the Empowered Committee.
Ø Research and Product Development: 25% of the total approved cost subject to a ceiling of Rs.50 Lakh for each product would be borne by the Scheme and the balance 75% by the concerned Export Promotion Councils/Exporters/Trade Promotion Organisations.
Ø Reverse vists of the prominent buyers etc. from the project focus countries: 2/3rd of the total approved expenditure on venue cost, publicity cost for the event, cost of the catalogues and other material, translation and interpreters’ charges, any other component approved by the Empowered Committee.
100% of the air travel cost of the foreign visitors in the economy/excursion class only would be financed. Foreign visitors would be meeting their own boarding/lodging expenses.
Ø Export Potential Survey of the States: 50% of the cost of survey subject to the ceiling of Rs.50 Lakh would be funded under the Scheme. Rest 50% would be borne by the organization of the State Government.
Ø Registration charges for product registration abroad for pharmaceuticals, bio-technology and agro-chemicals:
50% of the registration charge subject to a ceiling of Rs.5 Lakh for each registration. An exporter can apply for five registrations in a year and the total ceiling for each exporter shall be Rs.25 Lakh per annum.
Ø Testing charges for engineering products abroad:
An exporter can apply through concerned Engineering Export Promotion Council for getting assistance on reimbursement basis. A certificate from Indian Mission concerned certifying the amount paid for testing charges is required to settle the claim Preferences shall be given to the small and medium entrepreneurs.
50% of the testing charges subject to a maximum ceiling of Rs.1 Lakh for each testing would be provided. An exporter can apply for five tests in a year and the total ceiling for each exporter would be Rs.5 Lakh per annum.
Ø To support Cottage and handicrafts units:
For developing web-site for virtual exhibition, assistance @ 75% of the total approved cost. Preferences are given to the small and medium entrepreneurs in allocation of funds.
Where level of assistance for eligible activities, in the normal course is 75% and 2/3rd, the level of assistance for eligible activities in case of Cottage and Handicrafts units would be 90%.
Where normal rate is 50%, these units are eligible for 75%. Against normal eligibility of 25%, these units are eligible for 50%.
Ø To support recognized associations in industrial clusters for marketing abroad.
Funds provided through EPC on the prescribed scale for activities such as Market study, participation in trade fairs, etc. abroad, opening of warehouse and showrooms, display in international store and publicity.
Ø Studies on WTO related matters: 100%
Ø Project/Study which further the objectives of the Scheme:
50% of the project cost subject to maximum of Rs.50 Lakh in each case.
Ø ELIGIBLE AGENCIES:
Ø Departments of Central Government and organizations of Central/State Governments.
Ø Export Promotion Councils
Ø Registered Trade Promotion Organisations
Ø Commodity Boards
Ø Apex Trade Bodies recognized under Foreign Trade Policy.
Ø Recognised Industrial clusters
Ø Individual exporters: only for testing charges of engineering products abroad and registration charges of pharmceuticals bio technology and agro-chemicals.
Empowered Committee under the Chairmanship of Commerce Secretary decides such cases for assistance.
FUNDING SUPPORT BY COMMODITY BOARDS, AUTONOMOUS ORGANISATIONS LIKE APEDA:
Under various Financial Assistance Schemes being regulated by commodity boards, namely, Spices Board, Tobacco Board, Tea Board, Rubber Board, Marine Products Export Development Authority, APEDA and other autonomous organizations, exporters can avail of the same.
SPECIAL INCENTIVES FOR STAR EXPORT HOUSES AND STATUS HOLDERS:
[1] ONE STAR EXPORT HOUSE: Rs.15 Crores Performance during the
current plus the previous three years.
[2] TWO STAR EXPORT HOUSE: Rs.100 Crores
[3] THREE STAR EXPORT HOUSE: Rs.500 Crores
[4] FOUR STAR EXPORT HOUSE: Rs. 1500 Crores
[5] FIVE STAR EXPORT HOUSE: Rs. 5000 Crores
Small Scale Industry, Tiny Sector, Cottage Sector, Units registered with KVICs/KVIBs, NE States units, Sikkim and J&K Units, handloom/handicrafts/hand knotted or silk carpets, exports to Latin America/CIS/Sub-Saharan Africa, Units having ISO 9000/ISO 14000/WHOGMP/HACCP/SEI CMM level-II and above status, services, agro products are eligible for double weightage.
They are eligible for the following facilities:
Ø Licence/certificate/permission and customs clearances for both imports and exports on self-declaration basis.
Ø Fixation of Input-Output norms on priority within 60 days.
Ø Exemption from compulsory negotiation of documents through banks. The remittance, however, would continue to be received through banking channels.
Ø 100% retention of foreign exchange in Export Earner Foreign Currency account.
Ø Enhancement in normal repatriation period from 180 days to 360 days.
Ø Entitlement for consideration under the Target Plus Scheme.
Ø Exemption from furnishing of Bank Guarantee in Schemes under Foreign Trade Policy.
SPECIAL ECONOMIC ZONE SCHEME:
Ø Any private/public/joint sector or State Government or its agencies can set up SEZ.
Ø SEZ should have a minimum area of 1000 hectared and at least 25% of the area is to be earmarked for developing industrial area for setting up of units.
Ø 15 copies of application to be submitted to the State Government and the State Government will forward it to Department of Commerce.
Ø SEZ is duty free enclave and is deemed to be foreign territory for the purposes of trade operations and duties and tariffs. Goods and services going to the SEZ area from DTA are to be treated as exports and goods coming from the SEZ area into DTA are treated as if these are being imported.
Ø SEZ units may be set up for manufacture of goods and rendering of services.
Ø SEZ unit to be positive net foreign exchange earner within three years.
Ø Duty free goods to be utilized in 5 years.
Ø No routine examination by Customs of export and import cargo.
Ø No Separate documentation required for customs and Foreign Trade Policy.
Ø Full exemption in electricity duty and tax on sale of electricity for self generated and purchased power.
Ø Exemption from state sales tax, octroi, mandi tax, turnover tax and any other duty/cess or levies on the supply of goods from Domestic Tariff Area to SEZ Units.
Ø Support services like banking, post office, clearing agents. etc. provided in Zone Complex.
Ø 100% FDI permitted for townships with residential educational and recreational facilities on a cases to case basis.
Ø Income Tax benefit under 801A to developers for any block of 10 years in 15 years as per the choice of the developer.
Ø Duty free import/domestic procurement of goods for development, operation and maintenance of SEZs.
Ø Exemption from service tax.
Ø Income of infrastructure capital fund/company from investment in SEZ exempt from Income Tax.
Ø Investment made by individuals etc. in a SEZ company also eligible for exemption u/s 88 of Income Tax Act.
Ø For setting up a manufacturing, trading or service units in SEZ, 3 copies of project proposal in the format prescribed at Appendix 14-1A of the Handbook of Procedures Vol.1 to be submitted to the development Commissioner of SEZ.
FACILITIES TO SEZ ENTERPRISES:
Ø SEZ units may import or procure from the domestic sources, duty free, all their requirements of capital goods, raw materials, consumables, spears, package materials, office equipment, DG sets etc. for implementation of their project in the Zone without any license or specific approval.
Ø Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units.
Ø Goods imported/ procured locally duty free could be utilized over the approval period 5 years.
Ø Domestic sales by SEZ units be exempted from SAD.
INCOME TAX
Ø 100% Income-Tax exemption (10A) for first 5 years and 50% for 2 years
thereafter and not exceeding 50% of ploughed back profit for next 3 years.
FOREIGN DIRECT INVESTMENT:
Ø 100% foreign direct investment is freely allowed in manufacturing sector
in SEZ units under automatic route, except arms and ammunition, explosive, atomic substance, narcotics and hazardous chemicals, distillation and brewing of alcoholic drinks and cigarettes, cigars and manufactured tobacco substitutes.
Ø No cap on foreign investments for SSI reserved items.
OFF-SHORE BANKING (OBUs)
Ø Setting up of Off-Shore Banking Units allowed in SEZs.
Ø OBUs entitled for 100% Income-Tax exemption for 3 years & 50% for next 2 years.
BANKING/EXTERNAL COMMERCIAL BORROWINGS
Ø External commercial borrowings by units up to $ 500 million a year
allowed without any maturity restrictions.
Ø Freedom to bring in export proceeds without any time limit.
Ø Flexibility to keep 100% of export proceeds in EEFC account. Freedom
to make overseas investment from it.
Ø Commodity hedging permitted.
Ø Exemption from interest rate surcharge on import finance.
Ø SEZ units allowed to ‘write-off’ unrealized export bills.
Ø Exemption from interest rate surcharge on import finance.
CENTRAL SALES TAX ACT:
Ø Exemption to sales made from Domestic Tariff Area to SEZ units.
SERVICE TAX:
Ø Exemption from Service Tax to SEZ units.
ENVIRONMENT:
Ø SEZs permitted to have non-polluting industries in IT, and recreational facilities like golf courses, desalination plants, hotels and non-polluting service industries in the Coastal Regulation Zone area.
Ø Exemption from public hearing under Environment Impact Assessment Notification.
COMPANIES ACT:
Ø Enhanced limit of Rs. 2.4 crores per annum allowed for managerial remuneration.
Ø Regional office of Register of Companies in SEZs.
Ø Exemption from requirement of domicile in India
EXPORT ORIENTED UNITS SCHEME:
Ø Units undertaking to export their entire production of goods and services may set up the Export Oriented Unit Scheme, EHTP, STP or Bio-Technology Park Schemes for manufacture of goods, including repair, re-making, reconditioning, re-engineering, and rendering of services.
Ø These units have to obtain approval in the form of Letter of Permission/Letter of Intent from the concerned Development Commissioner of the Export Processing Zone. It is valid for 3 years. Its validity may be extended further upto 3 years. Further extension to be considered on case-to-case basis by the Board of Approval. Once the unit commences production, LOP/LOI is valid for 5 years for its activities. This period is further extended for 5 years by the concerned Development Commissioner. The import entitlement is worked out based on the manufacturing and export programme and is attested by the concerned DC. Customs duty is exempt on import of all goods.
Ø Investment is to be Rs.1 Crore and above in plant and machinery.
Ø These units shall be positive net foreign exchange earner. NFE is to be calculated cumulatively in blocks of five years, starting from the commencement of production.
Ø Can import or procure from domestic sources, free of duty all their requirements of capital goods, raw material, consumables, spares, packaging material, office equipment, DG Sets, etc. Anti-dumping duties are exempt. Domestic procurement is free from state levies including CST.
Ø Are eligible for concessions in respect of payment of Income Tax.
Ø Can achieve Export Performance and NFEP cumulatively over a period 5 years. No penal action for shortfalls during the first three years of operation.
Ø Can clear goods upto 50% of the value of exports in the domestic area on concessional duty. Sales beyond this limit can be made on full duty.
Ø Can supply to other EOU, etc. without payment of duty and such supplies are counted towards fulfillment of Export Performance.
Ø Supplies from the domestic tariff area to EOU are allowed Deemed Export benefit.
Ø Can procure duty free inputs for supply of manufactured goods to advance licence holders.
Ø Are exempt from industrial licensing for manufacture of items reserved for small scale industrial sector.
Ø Can repatriate their profits freely without any dividend-balancing requirement.
Ø Are permitted 100% Foreign Direct Investment through automatic approval route except for few sectors.
Ø 3 copies of the Project proposal in Appendix 14-A of the Handbook to be submitted to the concerned Development Commissioner.
DEEMED EXPORTS SCHEME:
Ø Deemed Exports refers to those transactions in which the goods supplied do not leave the country and the payment for such supplies is received either in Indian rupees or in free foreign exchange.
Ø For such supplies, Advance Licence for intermediate supply/deemed export/DFRC/DFRC for intermediate supplies are available.
Ø Deemed Export Drawback.
Ø Exemption from terminal excise duty where supplies are made against International Competitive Bidding. In other cases, refund of terminal excise duty is given.
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