Sunday, October 2, 2016

Tax rebates for garment export

Tax rebates for garment export
The rebate will be disbursed by the Customs along with duty drawback

The ministry of textiles has notified a scheme for Rebate of State Levies on Export of Garments (ROSL). This, first of its kind, has unique features and will apply with 'Let Export Order' dates from September 20 onwards.

The scheme seeks to rebate state value added tax or central sales tax on inputs, including packaging and fuel, duty on electricity generation and duties, and charges on purchase of grid power, as accumulated through the stages of production from yarn to finished garments. The ministry has notified the rebate rates for all items covered under chapters 61 and 62 of the All Industry Rates of drawback. Usually these are between one and two per cent of the FOB value for those availing of the special advance authorisation scheme and between three and four per cent of the FOB value for those claiming duty drawback. The scheme is valid for three years but the government can change the rebate rates any time.

An attention-grabbing condition of the scheme is that the rebate will be available for exporters who have constituted an Internal Complaints Committee (ICC), where applicable, in pursuance of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. A declaration to that effect will have to be given to the Customs at the time of claiming the rebate.

The rebate will be disbursed by the Customs along with duty drawback. The scheme is optional. So, the exporter claiming the benefit has to make a suitable declaration to the Customs regarding his eligibility for the rate and rebate, acceptance of the terms and conditions of the ROSL scheme, that he has not claimed and shall not claim the credit or rebate or refund reimbursement of the specific taxes that comprise the rebate of state levies under any other mechanism and also that he has constituted an ICC.

The Central Board of Excise and Customs (CBEC) has issued a detailed circular, clarifying various aspects of the scheme. It says the claim-cum-declaration of eligibility has to be made by the exporter on drawback exports at item level. The drawback exports (shipping bill or bill of export) may be standalone or in combination with other schemes. For the EDI (electronic data interchange) shipping bill, selection of the scheme code involving the ROSL scheme at the time of export shall itself amount to making a claim- cum-declaration of eligibility. For the EDI shipping bill, this shall be the only means to make the claim. If a need for a manual shipping bill arises, only then will the exporter printing the claim-cum-declaration on the shipping bill be accepted. No claim for rebate shall lie except in this manner, says CBEC.

Mostly, the conditions such as realisation of export proceeds that are applicable for sanction of drawback are equally applicable for rebates under the ROSL scheme but it is the ministry of textiles that will check the integrity of the declarations of eligibility under the scheme, and also initiate proceedings for recovery of any amount paid in excess or not payable to any exporter.

This is the first time the central government has agreed for a rebate on the taxes and other levies of state governments. Now that the garment sector has got relief, exporters in other sectors will be equally justified in claiming similar relief.

1 comment:

  1. Great and excellent blog about tax rebate for garments. duty drawback