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  3. Increase the Duty Drawback rate: Commerce Department

Increase the Duty Drawback rate: Commerce Department

20 May 2011 Evaluate

The commerce department is suggesting an increase in repayment rates under the Duty Drawback Scheme. The commerce department’s proposal is expected to assist exporters to facilitate in reducing their losses.

The Duty Drawback Scheme enables exporting companies to obtain a refund of custom duty paid on imported goods where those goods will be treated, processed, or incorporated into other goods for export, or are exported unused since importation. However, the compensation under the Duty Drawback Scheme is lower than DEPB.

Exporters will not be able to use tax benefits under the Duty Entitlement Pass Book (DEPB) scheme after it is closed on June 30. The government reimburses about $1.77 million a year to exporters on duty paid on imported inputs under the DEPB scheme.

Both the commerce and revenue department secretary met on Thursday to discuss the issues. As per the commerce department official, “Exporters are resisting the phasing out of the DEPB scheme as the refund rates are lower in the duty drawback scheme. We will ask the finance ministry to recalibrate the rates to bring the 2%,”

The commerce department also wants more items to be included in the drawback list. Exporters say it is very important that additions are made to the drawback list, as there are no corresponding drawback rates for several products, such as electronic items.

'All exports will be zero-rated after the DEPB scheme ends. Two similar schemes cannot go on. It will save some revenue for the government,' said Sunil Mitra, revenue secretary.
 
Exporters are worried that in hurry to provide drawback for all products, the finance ministry may come up with a residual list which will have low reimbursement rates.

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