Recently, Government of India vide notification no 16/2015-20, The Director-General of Foreign Trade amended the foreign Trade Policy 2015 -2020, and exempted the Integrated Good and Service Tax (IGST) and Compensation Cess under the Advance Authorisation, EPCG and EOU Scheme.
Central Government vide notification no 37/2022, dated 30.06.2022 exempted the Integrated Tax and Compensation Cess under the Advance Authorization as per Para 4.14 of FTP 2015 – 20.
The Advance Authorisation Scheme allows the duty-free import of inputs that are physically incorporated into an export. In addition to any inputs, packaging materials, fuel, oil, and catalyst which are consumed or utilized in the process of production of export products are also allowed.
The quantity of inputs allowed for a given product is based on specific norms defined for that product, which consider the waste generated in the manufacturing process. DGFT provides a sector-wise list of standard input output that exporters may choose to apply. Alternatively, exporters may apply for their own ad – hoc norms in cases where the SION does not suit the exporter. Advance Authorisation is applicable to a manufacturer exporter or merchant exporters who are linked to a supporting manufacturer.
The Integrated Tax and Compensation Cess under the EPCG Schemes as per para 5.01 (a) of FTP 2015 – 20 is exempt as provided in Notification No. 37/2022 Customs dated 30th June 2022.
The objective of the Export Promotion Capital Goods (EPCG) Scheme is to facilitate the import of capital goods for producing quality goods and services and enhance India’s manufacturing competitiveness. The EPCG Scheme allows the import of capital goods for pre-production, production, and post-production at Zero customs duty. Alternatively, the exporter may also procure capital goods from the domestic market in accordance with the provision of paragraph 5.07 of FTP.
The Integrated Tax and Compensation Cess under the EOU scheme as per Para 6.01(d)(ii) of FTP 2015-20 is exempt as provided in Notification No. 37/2022, dated 30.06.2022.
The EOU scheme is one of the export promotion schemes. Under the Scheme manufacturing or service sector units are allowed to be set up with the objective of exporting the entire production of goods manufactured or services.