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Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
1
Benefits to Exporters under
Indirect Taxation
(Excise, Customs and FTP etc.) &
Professional opportunities for Practicing
CAs
Seminar – CPE Study Circle of
Baroda Branch of WIRC of ICAI
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
2
INDEX
Page No
I. Legal Dispensation of Area - DTA-EOU-SEZ 05
A. DTA 06
- Status of Different Category of Exporters under DTA 07
A-1 Manufacturer Exporter
• Inputs Benefits 08
• Capital Goods Benefits 09
• Input Service Benefits 10
• CENVAT Credit / ITC Benefits 11
• CENVAT Refund Benefits 12
• (a) Finished Goods Benefits (Indirect Taxation) 13
• (b) Finished Goods Benefits – FTP 14
• ( c) Other FTP Benefits 15
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
3
INDEX
Page No
A-2 Merchant Exporter 16
A-3 Deemed Exporter 17
• Inputs Benefits 18
• Capital Goods Benefits 19
• CENVAT Credit Benefits 20
• CENVAT Refund Benefits 21
• Finished Goods Benefits 22
A-4 Service Exporter
• Inputs / Input Services Benefits 23
• Capital Goods Benefits 24
• CENVAT Credit Benefits 25
• CENVAT Refund Benefits 26
• Finished Services Export Benefits 27
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
4
INDEX
Page No
B EOU 28
• EOU Benefits 29
C SEZ 30
• SEZ – General 31
• Special Provisions 32-35
• Indirect Tax Exemptions 36-39
• Drawback 40
• Re-warehousing 41
• SEZ In & Out ward Transaction 42-43
• Foreign Trade Incentives to DTA Supplier 44
D Direct Tax Benefits 45
E Various Requirement of CA Certificates 46-47
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
5
Legal
Dispensation
of Area
DTA EOU SEZ
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
6
DTA
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
7
DTA
Goods Services
Service
Exporter
Manufacturer
Exporter
Merchant
Exporter
Deemed
Exporter
Status of Different Category of Exporters under DTA
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
8
Procurement
of Inputs
Without Duty /
Re-imbursement
Central
ExciseCustoms FTP
- Annexure-1
(Domestic)(ED)
43/2001-CE (N.T.)
(Free)
- Input Rebates21/2004-CE (N.T.)
(Domestic ED/CVD)(Re-imbursement)
-DBK–Brand
RateRule-6 / 7
(Both Central
Excise /
Customs)(Re-imbursement)
- Advance
Authorization96/2009-Cus
99/2009-Cus
- DFIA98/2009-Cus
(Free)
DTA – Goods - Manufacturer
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
9
Procurement
of Capital
Goods
Without Duty
FTP
EPCG 0% Duty102/2009-Cus
( 6 / 6 ) (Free)
EPCG 3% Duty103/2009-Cus
( 8 / 8 ) (Only 3% Duty)
DTA – Goods - Manufacturer
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
10
Procurement of
Input ServiceBy way of
Exemption / Re-Imbursement
Service Tax
2 Services
Exempted
(GTA & Commission)18/2009-ST
(Free)
18 Services
Refund on Actual Basis
( or Percentage Basis )52/2011-ST
(Re-imbursement)
DTA – Goods - Manufacturer
-Either 18 Services refund or % on F.G. FOB as per 52/2011.
-In case GTA Exemption is availed u/r 18/2009, then option to opt 17 services for
refund on actual basis under Noti. No. 52/2011 is available ( But No percentage route
is available )
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
11
CENVAT Credit / VAT ITC on
Inputs / C.G. / Input Services for the Exporter
Central
Excise VAT
ITCCENVAT
InputsCapital
Goods
Input
ServicesInputs
Capital
Goods
DTA – Goods - Manufacturer
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
12
CENVAT
Refund
Central
Excise
Excess Cenvat
Credit Refund5/2006-CE (N.T.)
(Input &
Input Services)
Finished Goods
Rebate19/2004-CE (N.T.)
(Input + Capital Goods
+ Input Services)
VAT
Input ITC
Portion RefundRule-15(6)&(7) /
Section-37
(Input)
DTA – Goods - Manufacturer
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
13
Finished
Goods
Central
Excise
Service
TaxCustoms VAT
F.G.
Rebate19/2004-CE
(N.T.)
LUT/Bond42/2001-CE
(N.T.) &
45/2001-CE
(N.T.)
(Bhutan)
(01-03-2012)
% on
Services
On FOB52/2011-ST
DBK
All Industry
Rate68/2011-Cus
(N.T.)
No VAT / CST
On Exports
(Traders
Form-H )
Basically the concept of AIR (DBK) is nothing but a Adhoc Advance Payment of Inputs Duties
reimbursement. If we have not satisfied with AIR (DBK) then we can go for Special Brand
Rate. Incase if there is no AIR (DBK) at all then we can go for fixation of Brand Rate.
DTA – Goods - Manufacturer
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
14
Finished
Goods
FTP
Normal
Goods
Agri
Goods
Old
(Resciend)
FMS /
NFMS /
SFMS
93/2009
-Cus
F.P.S./
Sp. FP T&S /
MLFPS/
NFPS/
NSFPS/
NMLFPS/
FPBB/
SBB
92/2009
-Cus
S.H.I.S.
104/2009
-Cus
VKGUY
94/2009-
Cus
Sp.VKGUY /
New VKGUY /
VKGUY Product /
Agri & Other Product/
Forest Product /
Gram Udyog /
Oleoresins /
Forest Produce
95/2009-Cus
DEPB
97/2009-
Cus
Target Plus
& DFCEC
105/2009-
Cus
DTA – Goods - Manufacturer
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
15
Other FTP Benefit
MAI
(Market
Access
Initiative)
MDA
(Market
Development
Assistance)
To P.C.
T.R.
(Expenses
Reimbursement
STATUS
(Status
Category)
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
16
Merchant Exporter
All the benefits narrated herein above for
Manufacturer exporter are equally applicable
to Merchant Exporters. In few cases the Merchant
Exporter can directly avail and in few cases
supporting manufacturer can avail.
DTA – Goods – Merchant Exporter
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
17
DEEMED EXPORTS what ?
1. Supply of goods against Advance Authorisation / Advance Authorisation for Annual requirement / DFIA
2. Supply of goods to EOU / STP / EHTP/ BTP
3. Supply of Capital goods to EPCG Authorisation holders
4. Supply of goods to Projects financed by multilateral or bilateral Agencies / Funds as notified by DEA / ICB / Supply and installation of goods and equipment to projects finance by multilateral or bilateral Agencies / Funds as notified by DEA, MoF under ICB
5. Fertilizer plants (5TH Five year plan)
6. Supply of goods to any project or purpose which the MoF by a notification
7. Supply of goods to power projects / refineries
8. Marine freight containers
9. Projects funded by UN Agencies
10.Nuclear power projects / as opposed to ICB
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
18
Procurement
of Inputs
Without Duty /
Re-imbursement
Central
ExciseCustoms FTP
- Annexure-1
(Domestic)(ED)
44/2001-CE (N.T.)
(Free)
-DBK–Brand
RateRule-6 / 7
(Both Central
Excise /
Customs)(Re-imbursement)
- Advance
Authorization96/2009-Cus
99/2009-Cus
- DFIA98/2009-Cus
(Free)
DTA – Goods – Deemed Exporter
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
19
Procurement
of Capital
Goods
Without Duty
FTP
EPCG 0% Duty102/2009-Cus
( 6 / 6 ) (Free)
EPCG 3% Duty103/2009-Cus
( 8 / 8 ) (Only 3% Duty)
Deemed Exporter can complete Export Obligation when he clear the
goods to the categories of 10 (of page No. 17) of above
DTA – Goods – Deemed Exporter
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
20
CENVAT Credit / on
Inputs / C.G. / Input Services for the Exporter
Central
Excise
CENVAT
InputsCapital
Goods
Input
Services
DTA – Goods – Deemed Exporter
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
21
CENVAT
Central
Excise
Finished Goods
RebateTED Refund
(Input + Capital Goods
+ Input Services)
In Some Cases Exemption as per Customs Noti. No. 06/2006 Dt-01-03-2006 as per Sr. 91
& 91-A. In other cases TED Refund (Non Mega Power Projects / Refineries. )
DTA – Goods – Deemed Exporter
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
22
Finished Goods
Received from the AAH
Invalidation + Annexure-1
Clearance without
payment of duties / or
If paid then TED Refund
(without Annexure-1)
Note – Other than Adv. License cases the local Deemed Exporter can also avail
DBK-AIR
DTA – Goods – Deemed Exporter
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
23
Re-Imbursement
of Inputs &
Input Services
Service Tax
Finished Service
Exports12/2005-ST
DTA – Services Exporter
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
24
Procurement
of Capital
Goods
Without Duty
Central
ExciseFTP
SFIS(Domestic)
34/2006-CE
SFIS(Import)
91/2009-Cus
EPCG
0% Duty( 6/6 )
102/2009-Cus
EPCG
3% Duty( 8/8 )
103/2009-Cus
DTA – Services Exporter
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
25
CENVAT
Credit
InputsCapital
Goods
Input
Services
DTA – Services Exporter
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
26
CENVAT
Refund
Central
ExciseService Tax
Excess Cenvat
Credit Refund5/2006-CE (N.T.)
Finished
Services Rebate11/2005-ST
DTA – Services Exporter
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
27
Finished
Services
Export
Service Tax FTP
Export of
Services9/2005-ST
SFIS
91/2009-Cus
DTA – Services Exporter
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
28
EOU
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
29
1. EOU can procure duty free indigenous / imported raw materials / Capital Goods
2. HSD Refund (Non CENVATABLE) and CST Refund available
3. EOU can clear manufactured goods into DTA. (Duty is payable 50% C.D.) DTAs Sales from free Procured Imported R.M. is also available.
4. All benefits narrated to DTA manufacturers are equally applicable related to FTP benefits as long as Income Tax benefits are not claimed (except DBK-AIR / AA / DFIA / EPCG).
EOU
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
30
SEZ
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
31
SEZ
• The First FTZ in India came up in 1965
• Later, the Government set up five more multiproduct EPZs
• SEZ policy in April 2000
• The Parliament passed the SEZ Act in 2005, which came into force together with the SEZ Rules,2006 on the 10th of February 2006.
• SEZs territories deemed to be outside the customs territory of India.
• The special status given to SEZs under section 53 of SEZ Act as areas deemed to be outside the Custom territory of India is for the limited purpose of conducting the authorized operations and to facilitate the import export activities in a simplified manner.
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
32
SEZ
Special Provisions / Important Provisions of
SEZ Act / Rules etc.
• Section-2(m) Supplies to SEZs and intra or inter-SEZ
supplies qualify as physical exports and are
eligible for export benefits
• Section : 07 Imports Exports exempted from duties &
taxes
• Section : 26 Special fiscal benefits
• Section : 27 Income tax benefits
• Section : 30 Levy of duties
• Section : 51 Over-riding effect of SEZ Act
• Section : 53 SEZ as deemed foreign territory & Port
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
33
• Rule : 11 Demarcation and fencing of SEZ and leasing
premises
• Rule : 24 Procedure for export benefits on supplies from
DTA
• Rule : 27 Imports and procurements
• Rule : 30(8) Reimbursement of Duty (RoD) in lieu of drawback for supply of goods to developers against payment in Indian Rupees
• Rule : 41 Sub-contracting
• Rule : 45 Exports
• Rule : 46(1) ‘Let Export’ order is given on the basis of
self certification
SEZ
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
34
• Rule : 46(10) Exports through a merchant
exporter or a status holder is
permitted subject to the
requirements
• Rule : 46(11) Procedure for third party
exports
• Rule : 47 DTA Sales
• Rule : 53 Foreign exchange earning
requirements
• Rule : 75 Self-clearances
• Rule : 76 Trading for the purposes
SEZ
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
35
• Instruction :11 Transfer from DTA of used capital goods
• Instruction :59 Inter-SEZ transfer of units
• Instruction No.68, 70, 11: Transfer of used Capital Goods:
There are no provisions in the SEZ Act / Rules preventing transfer of old capital goods. The only deterrent is non-availability of Income Tax exemption where the value exceeds 20% of the total capital goods installed in a year.
SEZ
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
36
SEZ
Indirect Tax exemptions
1) Exemption from Customs duties on imports.
2) Exemption from Central Excise duties.
3) Exemption from payment of Central Sales Tax on sale
or purchase of goods (other than newspapers) under
Central Sales Tax Act, 1956.
4) Exemption from Service Tax, education cess and
secondary and higher education cess leviable on
services received by units.
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
37
Services from DTA to SEZ ( Notification No. 17/2011-ST Dt-01-03-2011)
Refund can be
applied after
making payment
of Service Tax
Payable if – the
SEZ has Business
outside the SEZ
also
Services are exempted
If - the SEZ units is
Exclusively situated at
SEZ (No Business outside)
Group-III
Refund can be
applied after
making payment
of Service Tax
Payable if – the
Services are not
performed at
SEZ
Services are exempted
If - the Services are
performed at SEZ
Group-II
Refund can be
applied after
making payment
of Service Tax
Payable if – the
property is not
situated at SEZ
Services are exempted
If - the property situated
at SEZ
Group -I
Refund can be
obtained or notPayableExempted
Group of
Services
SEZ
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
38
• Are you ( from DTA ) sending your goods to SEZ unit or developer ?
• Need not to pay the excise duty. ( it is like a normal physical exports to you). or incase if your wish to pay the duty, you can obtain the rebate of Central Excise duty paid under rule 18 of the Central Excise Rules, 2002.
1. Circular : 6/2010 – cus dated 19 th March , 2010. ( related to rule 18 rebates)
2. Definition is mentioned in the section 2 (m) of the SEZ Act, 2005.
3. Exemption for excise duty on goods supplied from DTA to an SEZ unit or developer as per section 26 (c).
4. Over riding effect to the provisions of the SEZ Act over any other law is as per Section 51.
5. Procedure is mentioned in regard to removal as per rule 30 of SEZ Rules 2006.
6. Exemption is also specifically told in the CBEC circular 29 / 2006 – cus dated 2nd December, 2006.
SEZ
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
39
• Sale by DTA ( Gujarat ) to SEZ (Gujarat ) :
No VAT by the DTA ( as per section 5 A of Gujarat VAT Act,
2003 )
• Sale by DTA (Gujarat) to SEZ (for e.g. say Mumbai) :
Sale against Form – I ( No VAT by the DTA) ( section 8 (8)
of CST Act, 1956 )
SEZ
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
40
• Even SEZ can get the DBK Subject to NOC Received
from DTA. (Circular No 39/2010-Customs Dated : 15-10-
2010)
SEZ
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
41
• As per Rules 30 (4) of SEZ rules 2006 the re-
warehousing certificate to be received within 45 days.
Receipt of both the customs endorsed Bill of Export,
copy of ARE-1 are called as re-ware housing certificate.
• Incase if you dispatch without receipt of the bill of export
to the SEZ, then we loose the exports EXIM benefits.
SEZ
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
42
SEZ
---------VAT / CST
---Note – See page No.
37---Service Tax
---------Excise Duty
---------Customs Duty
EOU / SEZ
To SEZ
DTA to
SEZ
Import Into
SEZ
SEZ inward Transaction
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
43
SEZ
Payable (In case if VAT
Payable No SAD)
Payable (In case if
VAT Payable No
SAD)
---VAT / CST
SEZ has to paySEZ has to pay---Service Tax
---------Excise Duty
100% EOU has to file Bill of
Entry at SEZ Customs..
EOU Provide Procurement
Certificate to SEZ.
Payable at
Effective Rate (All
Customs duties
including CVD)
---Customs
Duty
SEZ to
EOU
SEZ to
DTA
Exports
From SEZ
SEZ Outward Transaction
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
44
SEZ
Yes3. DBK
Yes1. Adv. Authorization / DFIA
Yes2. EPCG
No7. SHIS
No6. Served from India Scheme (SFIS)
No5. Focus Market Scheme (FMS)
Yes4. Focus Product Scheme (FPS)
Foreign Trade Incentives to DTA Supplier
• SEZ will not get any incentives upon Exports from SEZ to foreign
countries.
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
45
Direct Tax
DTAEOU / STP /
EHTP / BTPSEZ
Section-80HHCOmitted w.e.f.
AY-2005-06
Section-10A / 10BOmitted w.e.f.
AY-2012-13
Section-10AAAvailable
-100% Profits forFirst 5 AYs
-50% Profits for Next 5 AYs
-50% Profits for Next 5 AYs *
* Provided special reserve
Is to be created
MAT is introduced from AY
2012-13 @18.50% on SEZ profits
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
46
Various Routine CA Certificates to be obtained under FTP/Refund Cases/Taxation
At the time of applicationIn lieu of Bank Certificate of
Exports and realizationCertificate for OFFSETTING of Export ProceedsAppendix 22 D12.
At the time of application
Duty Free Import Allowance
Certificate
Export Performance of non EOUs Other than
Pharma & Biotechnology SectorsAppendix 15 B10.
At the time of Refund application Refund Claim4% SAD Refund ClaimCBEC circular 16/2008 & JNPT P.N. 53/201019.
At the time of application PermissionFactory Stuffing PermissionCustoms Public Notice No. 23/201018.
If more than Six months period is involvedDBK (AIR) Exports realization
Realization made against Exports under DBK
(AIR)Customs Public Notice No. 37/201117.
At the time of applicationDeemed Exports DBK/Refund
DBK Claim (AIR)/Fixation of DBK claim/ TED
RefundAppendix 3516.
At the time of Redemption of EPCG LicenceEPCG LicenceRecords verification confirmationAppendix 26 A 15.
At the time of application EPCG Licence
For EPCG License past 3 years Exports
performanceAppendix 2614.
At the time of Redemption of LicenceAdvance LicenceFor RM ConsumptionAppendix 2313.
At the time of application
FIEO membership
Authority letter to be present in meetings on
behalf of companyAppendix 19 A11.
At the time of application
Duty Free Import Allowance
CertificateFor duty free Import of R&D EquipmentsAppendix 15 A9.
At the time of applicationPermissionPermission for Sale of goods in DTA by EOUAppendix 14-I-H8.
With Annual ReportGuidelinesLegal Agreement for EOUAppendix 14-I-F7.
At the time of Refund applicationCST RefundFor CST reimbursementAppendix 14-I-I6.
At the time of applicationAdvance LicenseProduction consumption dataAppendix 11 A5.
At the time of applicationSHIS ScripStatus Holder Incentive ScripANF 3E4.
At the time of applicationVKGUYAgri Infrastructure IncentiveANF 3D3.
At the time of application SFIS ScripServed From IndiaANF 3B2.
At the time of applicationStatus CertificateStatus Holder CertificateANF 3A1.
StageLicence/ ScripPurposeAppendix/ Forms/Notification/Public NoticeSr. No
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
47
Various Routine CA Certificates to be obtained under FTP/Refund Cases/Taxation
At the time of remittanceCertificateFor import of ServicesForm No. 15CB of Income Tax Act25.
At the time of Refund application
Refund claim
For obtaining Service Tax Refund on actual
basisService Tax Notification No. 52/201121.
At the time of Refund application Refund
Refund of Unutilized CENVAT credit of
Inputs and Services (Rule 5)
CBEC Circular 120/01/2010 dtd.
19.01.1020.
At the time of applicationCertificate
Certificate for claiming Exemption in respect
of Area Based units
Form No. 10CCAC/10CCB of Income
Tax Act24.
At the time of submission of audit reportAudit ReportTax audit reportSection 44AB of Income Tax Act23.
At the time of submission of audit report Audit ReportFor VAT audit report Form No. 217 (As per Section 63)22.
StageLicence/ ScripPurpose
Appendix/ Forms/Notification/Public
NoticeSr. No
Prepared & Presented By -
Sreeram Kaza Dated-31-01-2012
48
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