Exporters have always been given a priority and that’s not the only thing they’ve earned. They can also enjoy numerous incentives. These benefits can help them in so many ways, from saving on the taxes to gaining free shipping and whatnot. Unfortunately, most exporters are not aware of these fruitful incentives and hence, get refrained from earning the benefits. If you’re an exporter, then this article is for you. Keep reading to know how to export incentives work and how you can avail them!
What Are Export Incentives?
Export incentives are intended for the exporters as an allowance to compensate for the infrastructural and operational costs they face and for bringing in foreign exchange. These incentives are issued by the government to the ones who qualify the eligibility criteria.
How do Export Incentives work?
To increase competitiveness in the international markets, the government imposes less tax on the exported goods. The export incentives ensure a guaranteed global reach of a domestic product and growth of the country’s export businesses as well as economy.
However, the benefits are provided only after looking at the availability of particular goods. Further, these incentives can be modified or tweaked based on the abundance or scarcity of the goods.
Popular Export Incentives Schemes
1. Advance Authorization Scheme
According to this export incentives scheme, businesses can import certain inputs without paying the customs and duty charges, if this input is a material for producing export items. Besides, the value of additional export items is fixed at 15% by the licensing authority of India. Further, the validity of this policy is 1 year or 12 months from the date of issue.
2. Duty Drawback Scheme For Service Tax, Customs and Central Excise
Under these export incentives schemes, the tax or duty amount paid for the items that are used for manufacturing exporting goods is refunded to the exporters. This refund amount is referred to as Duty Drawback. Mostly this scheme is listed on the export schedule itself. But if it’s not there, you can contact the tax officials to provide you with the benefits of this scheme.
3. Duty-Free Import Authorization
This is another great perk introduced by the government for the exporters in the country. This scheme is a result of a combination of DFRC and DEEC which allows exporters to import certain products for free.
4. Service Tax Rebate
Service tax rebates are offered by the government to the exporters in the case of specific outputs for export goods.
5. Duty-Free EPCG (Export Promotion Capital Goods) Scheme
This scheme is available for the exporters who deal in electronic goods. According to this scheme, import of raw materials or capital goods for pre-production, post-production and production of export items, can be availed at 0% customs duty rates. However, this scheme is only applicable when the export value is a minimum of 6 times the customs and duty fee you’ll save on imported goods.
6. Market Access Initiative (MAI) Scheme
MAI is an initiative to offer financial help for the eligible candidates for undertaking marketing activities like branding, capacity building, market research and compliances in the import market.
7. Marketing Development Assistance (MDA) Scheme
The goal of this scheme is to promote export activities, help export promotion councils to produce the goods and to perform other few marketing activities in the global markets.
All of these export incentives have helped businesses to grow and earn visibility in the international markets. Apart from these, there are many other incentives you can avail by contacting your tax authorities. Such incentives also help an economy to boost its trade export and overcome trade deficits in the long run.
