Goods and Services Tax

Atal Pension Yojana (APY) Modified to Increase the Acceptability of the Scheme Amongst Informal Sector Workers and Make the Scheme More Viable; Subscribers Would Now Have an Option to Make the Contribution on a Monthly, Quarterly, Half Yearly Basis Instead of on a Monthly Basis Earlier; Discontinuation of Payment of Contribution Provision Substantially Modified in Favour of the Subscriber; Penalty on Delayed Payment has Been Simplified – Dated:- 20-8-2015 – The Atal Pension Yojana (APY) was launched by the Prime Minister Shri Narendra Modi at Kolkata on 9th May, 2015. APY provides a minimum guaranteed pension of ₹ 1000 per month or ₹ 2000 per month or ₹ 3000 per month or ₹ 4000 per month or ₹ 5000 per month, at

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is earlier Discontinuation of payment of contribution provision has been substantially modified in favour of the subscriber. The account will not be deactivated and closed till the account balance with self-contributions minus the Government co-contributions becomes zero due to deduction of account maintenance charges and fees Also the penalty on delayed payment has been simplified to Rs. One (1) per month for contribution of ₹ 100, or part thereof, for each delayed monthly payment instead of different slabs given earlier Similarly, premature exit from the scheme before sixty years of age was not permitted earlier except in exceptional circumstances, i.e., in the event of the death of the beneficiary or terminal disease. Now the modif

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Goods and Services Tax – Started By: – SANDESH SHINDE – Dated:- 18-8-2015 Last Replied Date:- 14-12-2015 – Dear Sir, Please explain us when there is stock transfer within state which GST would be levied, IGST or CGST & SGST and additional 1% will leaviable.Please explain, thanks & regards. – Reply By KASTURI SETHI – The Reply = If stock transfer is within State it would attract tax under CGST or SGST depending upon the product whether scheduled under CGST or SGST. No additional 1 % will

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VAT and Sales Tax – Exemption granted on Invalid F-Form – Invocation of revision jurisdiction – KGST – If there was error resulting in revenue losing tax, it would be prejudicial to interests of Reven

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Goods and Service Tax – GST – By: – Bimal jain – Dated:- 17-8-2015 – Dear Professional Colleagues, Rajya Sabha adjourns sine die without passing the GST Bill With the Prime Minister Shri. Narendra Modi Government going hammer and tongs using its majority in Lok Sabha to clear legislative agenda, Shri. Modi's reform agenda suffered a major blow on Thursday, August 13, 2015, when the lawmakers ended the Monsoon Parliament session without approving the much awaited Constitution (122ndAmendment) Bill, 2014 on Goods and Services Tax ( GST Bill or 122nd CAB ) aimed at boosting economic growth by harmonising a mosaic of State and Central levies replacing a chaotic structure that inflates costs. The Monsoon session of the Parliament, which saw protests between the Government and the Opposition, has been a complete washout. However, on the second day of the session, i.e. on July 22, 2015, Select Panel of the Rajya Sabha managed to submit its Report on the GST Bill amid Opposition furore ov

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advice of the Government for the purpose of deliberating and voting on the Bill . There are, however, three caveats: If a Bill passed by one House but rejected by the other; or If disagreement between the two Houses on amendments to the Bill; or When more than six months have lapsed after the date of receipt of the Bill by the other House without passing it. Thus, calling a Joint session to make up the difference is not an option for two reasons viz. GST Bill was struck in the Rajya Sabha with Oppositions neither saying yes or no and for a Constitutional Amendment Bill, it needs to be passed separately in each house by a 2/3rd majority of the members, present and voting. Extending the session after break Still keen to ensure passage of the GST Bill, the Centre has kept its option open of reconvening the session with the Cabinet Committee on Parliamentary Affairs on Thursday deciding not to recommend immediate prorogation of the Houses after they are adjourned sine die. Special session

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by External Affairs Minister Sushma Swaraj and Finance Minister Arun Jaitley. GST Bill hangs midway: April, 2016 deadline under mist The virtual closing of the Monsoon session without any major business being transacted is a blow to the Government which was looking to get major pending legislations, including the GST bill, passed in both houses of the Parliament so as to get the economy back on track. The delay in the passage of the GST bill has put a question mark on the planned roll out of the GST era by the appointed date of April 1, 2016 which now seems to be cumbersome task for the Government to meet a self-imposed deadline. The GST Bill which will subsume all Indirect taxes into one uniform levy across the Country, has to be first passed in the Rajya Sabha with 2/3rd majority followed by its ratification by at least 50% of the States before it becomes law of the land. Following this, the Government will set up the GST Council within 60 days from the date of commencement of 122nd

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Dated:- 12-8-2015 – Under the proposed GST regime, both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on supply of goods and services. Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the States Goods and Service Tax (SGST) on all transactions within a State. The Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. The proceeds

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Income Tax – Withholding of tax – The software has been purchased from Microsoft, the cost of which has been distributed amongst all the group entities. It is pure case of reimbursement of cost and ad

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Companies Law – Manipulative, fraudulent and unfair trade practices – Circular trading – not in dispute that six clients of Appellant acted in collusion amongst each other in synchronized / circular /

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GST KNOWLEDGE SERIES # 4: COMPARISON OF GST BILL 2014 AND RECOMMENDATIONS OF SELECT COMMITTEE OF RAJYA SABHA,2015 – Goods and Service Tax – GST – By: – CA. Chitresh Gupta – Dated:- 5-8-2015 Last Replied Date:- 30-12-1899 – The Constitution (122nd Amendment) Bill, 2014 was introduced in Lok Sabha on December 19, 2014 and was passed by it on May 6, 2015. The Bill was referred to a Select Committee of Rajya Sabha for examination which submitted its Report on July 22, 2015. The Report contained various recommendations along with three Notes of Dissent submitted by Congress, AIADMK and CPI. The Table below compares the provisions of the 2014 Bill with the recommendations of the Select Committee and the Notes of Dissent. Constitution (122nd Amend

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al 1% tax, states should be permitted to retain 4% of centre s share of IGST on all inter-state supplies of goods. Compensation to states (Clause 19) Parliament may provide for compensation to states for a maximum period of five years 100% Compensation to be for a five year period. 100% compensation to be provided for five years. Compensation must be deposited in a GST Compensation Fund, under the GST Council. Coverage of GST (Clauses 12, 14 and 17) Alcoholic liquor for human consumption to be exempt from GST. GST is to be levied on petroleum crude, high speed diesel, motor spirit, natural gas, aviation turbine fuel at a later date. GST to be imposed on tobacco. Centre to impose additional levy on tobacco. No Changes Proposed Tobacco and to

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of GST rates (over the floor rate) within which CGST and SGST may be levied on specific goods or services or class of good or services. Voting: No changes proposed A statutory GST Council is not required. A body like Empowered Committee of state Finance Ministers is adequate. A ceiling of 18% must be imposed on GST rates. Special consideration to be given to states or Union Territories whose population does not exceed 20 lakh, (ex. Goa or Puducherry). Voting: States must have 3/4 of the weighted votes, and the centre must have 1/4. GST is by far one of the most important and voluminous Indirect Taxation reform in India which has far reaching effects. GST Knowledge Series is an attempt to spread awareness of the Proposed GST Regime in clear

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Goods and Service Tax – GST – By: – Pradeep Jain – Dated:- 4-8-2015 Last Replied Date:- 6-8-2015 – Introduction:- The Goods and Services Tax (GST) is the most awaited reformation in the indirect tax structure of India which is planned to be implemented w.e.f. April 1, 2016. It has been the most happening topic in the parliament since December 19, 2014 when The Constitution (122nd Amendment) (GST) Bill, 2014 was first presented by the Finance Minister, Mr. Arun Jaitley in the Lok Sabha. In this piece of writing, the authors have made an attempt to give an insight of merits and probable threats in GST proposals. About GST:- GST is a Value Added Tax proposed to be levied in lieu of manufacture, sale and consumption of goods and services. It will replace all indirect taxes whether levied on goods and services by the Central and State governments including Central Excise Duty, Countervailing Duty, Service Tax, Value added tax, Octroi and entry tax, luxury tax, etc. It will be implemented c

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indirect tax is kept keeping in view the cascading effect and due provisions are framed to lower down the same. However, more the no. of taxes, more the cascading effect. When we talk of excise duty, service tax or VAT, there are Cenvat credit rules which allow the credit of input tax/duty suffered by the material or service so used. Still there are cases where the cascading effect is clearly visible but there is no mechanism in the law to deal with it. For eg. entry tax, octroi, etc. Almost every goods are subject to these taxes but no credit is allowable as these are collected normally by local bodies. Thus, ultimately these taxes form part of the cost of product which is further subject to excise duty or service tax or VAT. Thus, cascading effect do exists. This particularly happens when the same goods or service suffers a no. of taxes and no set off facility is available. Implementation of GST will bring drastic reduction in the cascading effect as most of the indirect taxes prevai

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ards. In the year 2006, Supreme Court gave a landmark judgment in the case of M/s BSNL and others wherein it was held that if the sale of the SIM card is merely incidental to the service being provided and facilitates the identification of the subscribers, their credit and other details, it would not be assessable to sales tax. While giving this decision, Supreme Court held that both the taxes cannot be levied on single transaction. But interestingly, even after this judgment there are several transactions which are subject to both service tax and excise duty. Further, there is a concept of works contract, both in the VAT law as well as in service tax. Though in both the laws, there is a provision of abatement or composite scheme, still there is part of total value which is subject to both VAT and service tax. All these problems will come to an end after implementation of GST. Rationalization of tax structure & simplification of compliance procedure:- At present, there are multiple

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be maintained by employing man, money and energy. This ultimately leads to inefficient utilization of nation s resources. Increase in product competitiveness in international market:- With the implementation of GST, in long run, there will be reduction in overall cost of products manufactured in India. This will make Indian products more competitive in International market. It is worth mentioning here that many of our top competitors in the international market have already switched to GST. Implementing GST in India will be a step forward in making our product more cost effective in international market. PROBABLE THREATS IN GST PROPOSAL:- Lots of publicity has been made about the benefits of implementing GST. However, on going through the GST proposal, it is found that there are some grey areas which sighs that it is nothing but a carry forward of VAT, excise duty and service tax in new name and fame. Let s have a look on these areas of negativity of GST:- Rate of GST: It s on higher

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It has been proposed that Decision in GSTC shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:- (a) The vote of the Central Government shall have a weightage of onefourth of the total votes cast, and (b) The votes of all the State Governments taken together shall have a weightage of three-fourth of the total votes cast, in that meeting. And the vote of each state shall have a weightage proportionate to the population of that State. [emphasis supplied] Thus, while assigning the weightage to vote, the population has been made the prime criteria. It is worthwhile to mention here that there are certain states which have very less population but their share in taxes is on much higher side. Such states, though contributing more, will lag behind in the decision making process taking place at GST Council. 1% additional tax on supply of goods:- It has been propose

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may not take effective steps for smooth run of GST as they are being compensated for the losses. It is also possible that the actual loss is much lower than that shown on records in order to get higher compensation. The Central Government will have to take steps to ensure that this proposal in the GST bill is not misused by the States. GST Proposal: Not friendly to important service sector like banks:- It is much hyped that GST will bring Indian goods a step forward in the International market. The reasons so given are that the GST will make Indian products cheaper in long run and thus will promote exports. In this regard, it is to be noted that the banking sector pays an important role in the exports. Whether it is export of service or export of goods, the role of banks is vital. It is worthwhile to mention here that at present service tax @ 14% is being levied on the banking transactions. On introduction of GST, this rate will be on much higher side as predicted. This will ultimatel

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s proposal which was explained by the Government that if any separate body is constituted for dispute resolution, it will hamper the working of GSTC in general and of legislature in particular. However, even after this explanation, there are possibilities that the decision taken on the disputes are not true and fair, particularly when they relate to small states which possess lower voting power (since voting weightage is based upon population). If any separate body is not constituted, the task of laying down the dispute resolution mechanism will be the toughest one. While parting:- The introduction of GST along with other government initiatives like the make in India programme have the potential to drastically bring down costs, re-define and re-shape the economy of India. The benefits of implementing GST have been much talked but the probable threats have only been popularized as opposition party s publicity stunts to hamper the implementation of GST. Whatever be the case, the fact is

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Goods and Services Tax – GST Dated:- 3-8-2015 – News – F. No. A-11013/18/2015-Ad.IV Government of India Ministry of Finance Department of Revenue (Central Board of Excise Customs) 6 th Floor, HUDCO Vishala Building, Bhikaji Cama Place, R.K. Puram, New Delhi, dated 31.07.2015 ORDER No. 01/Ad.IV/2015 Consequent upon, the decision of the Board to create a GST Directorate in Delhi by shifting the headquarters of DGST, Mumbai to Delhi, it has been decided that Directorate General of Service Tax (DGST) will henceforth be re-named as Directorate General pf Goods Service tax (DGGST) w.e.f. 01.08.2015. 2. It has also been decided that the headquarter of DGGST will be shifted to Delhi from Mu

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d in DGST Mumbai, Kolkata and Chennai (other then the AD who is loan basis to DGCEI) are to be placed at the disposal of Chief Commissioner, Service Tax, Mumbai, Chief Commissioner Service Tax, Kolkata and Chief Commissioner service Tax, Chennai respectively w.e.f. 1.08.2015on loan basis for one year. (b) The Services of Group B C and D officers posted in DGST Mumbai, Kolkata and Chennai are placed at the disposal of respective cadre controlling Chief Commissioners for a period of one year. (c) The officers posted at DGST New Delhi will be treated as the officers posted to DGGST New Delhi w.e.f. 01.08.2015. 4. The issues with approval of IFU vide their U.No. 466/2015/IFU-II dated 31.07.2015. – News – Press release – PIB Ta

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Dated:- 31-7-2015 – The State Governments have not objected to the proposed formula of the Union Government for sharing of revenue with States that would be earned as Goods and Service Tax (GST). Under the proposed GST regime, both Centre and States will simultaneously levy GST across the value chain. Tax will be levied on every supply of goods and services for consideration. Centre would levy and collect Central Goods and Services Tax (CGST) and States would levy and collect the State Goods an

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VAT – Delhi – Public Notice – Dated:- 30-7-2015 – DEPARTMENT OF TRADES & TAXES VYAPAR BHAWAN IP ESTATE DELHI PUBLIC NOTICE Dated 30/07/2015 It is envisaged that GST is likely to be rolled out with effect from 01st April 2016. Accordingly all the TINs of dealers shall be replaced with the GSTIN on the basis of their declared PAN details in the department. Department has observed that in respect of various registered dealers the PAN details are either not available in the database of the Depa

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Goods and Service Tax – GST – By: – CA. Chitresh Gupta – Dated:- 29-7-2015 Last Replied Date:- 30-12-1899 – One of the crucial issue for successful implementation of GST relates to the determination of the GST rate. Since the GST is primarily intended as an exercise in reforming the consumption tax in India and not an exercise for additional resource mobilisation through discretionary changes, the CGST and SGST rates should be such rates which would yield the same revenue as collected from the various taxes which will be subsumed in the CGST and SGST (hereafter such rates shall be referred to as 'revenue neutral rates' or 'RNR'). The RNR for the CGST and the SGST is determined in accordance with the formula- RNR = R X 100 B Where; RNR : Revenue Neutral Rate for the Centre or the States as the case may be; R : Collection from the Central or State taxes, as the case may be, which are proposed to be subsumed in the CGST and SGST; B: Estimated Tax base of the GST [A] WHAT

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the government is not able to arrive at consensus for the threshold. Currently, under Excise it is ₹ 1.50 Crores, under Service Tax it is ₹ 10 lacs and under various Vat Act, it ranges from ₹ 5 lacs to ₹ 20 lacs. Thus unless the government has clarified the above, the exact tax base which will be liable to GST can t be estimated. Consequently, determination of GST rate will be herculean task. [B] WHAT WILL BE RATE STRUCTURE UNDER GST? As per the First Discussion Paper released by The Empowered Committee, it has been decided to adopt a two-rate structure -a lower rate for necessary items and goods of basic importance and a standard rate for goods in general. There will also be a special rate for precious metals and a list of exempted items. For upholding of special needs of each State as well as a balanced approach to federal flexibility, and also for facilitating the introduction of GST, it is being discussed whether the exempted list under VAT regime including

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nt. However, in order to provide for an alternate buoyant source of revenue to the third-tier of Government. The rate of CGST and SGST on all non-SIN goods is recommended by Task Force at the single rate of 5 percent and 7 percent, respectively. For SIN goods comprising of emission fuels, tobacco products and alcohol, both the Central government and the State government may continue to levy taxes as at present, in addition to CGST and SGST. The empowered committee of state finance ministers has virtually trashed the Thirteenth Finance Commission task force s Goods and Services Tax (GST) report. They question the methodology applied by the committee to arrive at the 12 per cent revenue neutral rate. The states have expressed reservations on the methodology and the approach of the taskforce. It (the rate suggested by the taskforce) does not tally with the estimates made by the government, the National Institute of Public Finance and Policy, and the states. We will like them to review the

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sal in rates across various States compromises the objectives of a single common market significantly. The matter becomes even more complex if such variation in rates is permitted in the case of services. Services, being intangible, are difficult to be related to geographical locations and pose significant challenges in deciding the precise place where they are liable to be taxed. If the autonomy is permitted only in respect of goods, (and not services), it leads to different problems of distinguishing between goods and services, which is not easy in a modern economy where such distinctions are withering away fast. Moreover, variations in rates across States lead to arbitrage opportunities, resulting in evasion and distortion in production and supply chain. Thus the benefits of keeping harmonized structure far outweigh the desire to provide unrestricted autonomy. On floor rates, Dr. Parthasarathi Shome, Director & Chief Executive, Indian Council & Research on International Econ

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goods, not exceeding one percent in the course of inter-State trade or commerce. This additional tax will be collected by the Government of India for a period of two years, and assigned to the States from where the supply originates. Recently, the Select Committee of Rajya Sabha known to be suggesting that this additional @ 1% tax on inter-state supply of goods should be confined to inter-state movement of goods for consideration only. Sub Penal of Empowered Committee Recommended the revenue neutral rate 27% (SGST 13.91% and CGST 12.77%). This has been referred to the National Institute for Public Finance and Policy (NIPFP), as these were on the revenue estimates of 2011-12. COMMENTS A Select Committee of Rajya Sabha (which is examining the GST Constitutional 122nd Amendment Bill 2014) has observed that Standard GST rate should be within 20%, while the lower one should not cross 14%. It also suggested that the proposed GST council may opt for a broad based and moderate rate as the high

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Goods and Service Tax – GST – By: – CA. Chitresh Gupta – Dated:- 24-7-2015 – In continuance of our earlier series titled GST Knowledge Series# 1, Understanding the Mechanics of Goods & Service Tax, we have discussed the basic DNA of Goods & Service Tax popularly known as GST. These features as applicable to India were: DUAL GOODS AND SERVICE TAX APPLICABILITY OF GST TO ALL TRANSACTIONS DESTINATION BASED MULTI POINT LEVY COMPUTATION OF GST ON THE BASIS OF INVOICE CREDIT METHOD PAYMENT OF GST UNIFORM PROCEDURE FOR COLLECTION OF GST In this Article, we will take the discussion forward and discuss in detail about other Salient Features of GST. THRESHOLD LIMIT The present threshold limits prescribed in different State VAT Acts below which VAT is not applicable varies from State to State. A uniform State GST threshold across States is desirable and, therefore, it is considered that a threshold of gross annual turnover of ₹ 10 lakh both for goods and services for all the States

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tain GST registration number. The taxable entities with lower turnover will also have the option to register. As per First Discussion paper, each taxpayer would be allotted a PAN-linked taxpayer identification number with a total of 13/15 digits. This would bring the GST PAN-linked system in line with the prevailing PAN-based system for Income tax, facilitating data exchange and taxpayer compliance. There will be single GST registration number for all branches in a State. Therefore, a dealer having branches across States will have as many GST registration numbers as the number of States in which he operates. 4. INPUT TAX CREDIT (ITC) SET OFF Since the Central GST and State GST are to be treated separately, taxes paid against the Central GST shall be allowed to be taken as input tax credit (ITC) for the Central GST and could be utilized only against the payment of Central GST. The same principle will be applicable for the State GST. Further, the rules for taking and utilization of credi

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PORTS Imports will be brought under the scope of GST with necessary Constitutional Amendments. They will treated at par with inter-state transactions and Integrated goods and service tax (IGST) will be levied on imports. The incidence of tax will follow the destination principle and the tax revenue will accrue to the State where the imported goods and services are consumed. Full and complete set-off will be available on the IGST paid on import on goods and services. 9. SPECIAL INDUSTRIAL AREA SCHEME After the introduction of GST, the tax exemptions, remissions etc. related to industrial incentives should be converted, if at all needed, into cash refund schemes after collection of tax, so that the GST scheme on the basis of a continuous chain of set-offs is not disturbed. 10. MAINTENANCE OF RECORDS A taxpayer or exporter would have to maintain separate details in books of account for availment, utilization or refund of Input Tax credit of CGST, SGST and IGST. 11. PERIODICAL RETURNS The

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ll procedures under CGST and SGST should be uniform. The Central Government will be responsible for establishing a taxpayers information network (TINXYS) keeping in view the information requirement of CBEC and the State tax administration. The TIN will be shared between the Centre and the States. The information furnished through periodical returns shall be stored in a common database with access to both the CBEC and the State tax administrations.Since the tax base will be common, there should be a common appellate authority. Similarly, the Authority for Advance Ruling will also be common. No authority should have any power to make preventive detention for the purposes of CGST and SGST. 14. GOODS AND SERVICE TAX COUNCIL As per the Constitution Amendment Bill, 2014 ( Bill ), there will be a Goods and Service Tax Council who shall make recommendation to the Union and the States. The Bill provides that the administration of GST would be the responsibility of the GST Council which would th

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FEMA – 347/2015-RB – Dated:- 24-7-2015 – RESERVE BANK OF INDIA (Foreign Exchange Department) (CENTRAL OFFICE) NOTIFICATION NO. 347 /2015-RB Mumbai, 24th July, 2015 Foreign Exchange Management (Export of Goods and Services) (Second Amendment) Regulations, 2015 G.S.R. 579(E).-In exercise of the powers conferred by clause (a) of sub-section (1), sub-section (3) of Section 7 and sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999) and in partial modification of its Notification No.FEMA.23/2000-RB dated May 3, 2000 as amended from time to time, Reserve Bank of India makes the following amendment in the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, as amended from time to time, n

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2015 (7) TMI 1414 – TELEGANA HIGH COURT – TMI – Validity of assessment order – assessment was made alleging that the petitioners had purchased the goods falling under 5th schedule the purchase details from whom the petitioners had purchased had not been set out – HELD THAT:- In the facts of the present case and in the circumstances the assessment order is set aside. However, considering the fact that the assessment orders are set aside, it is deemed appropriate to direct the respondent authorities to furnish the details to the petitioners within a period of four (4) weeks from today and complete the assessment proceedings within a period of three (3) months thereafter. It is needless to mention that the petitioners shall be entitled to

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s from whom the petitioners had purchased had not been set out. As a matter of fact, the petitioners had specifically pleaded that they had not dealt with the said goods and in that connection the petitioners requested for furnishing of the names of the sellers from whom the petitioners alleged to have purchased. Assessing Officer had referred to this contention that does not deal with the same. When the writ petition came up for admission on 14-07-2014, the learned Government Pleader sought time to get instructions to produce the record. Today, the record has been produced and after perusing the record, learned Government Pleader fairly submits that the record does not disclose the material particulars sought by the petitioner hav

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GST Knowledge Series # 1 : Understanding the Mechanics of Goods & Service Tax – Goods and Service Tax – GST – By: – CA. Chitresh Gupta – Dated:- 17-7-2015 – The Goods and Services Tax (GST) is a comprehensive value added tax (VAT) on the supply of goods or services. It is levied and collected on value addition at each stage on sale or purchase of goods or supply of services based on input tax credit method but without state boundaries. There is no distinction between goods or services and they are taxed at a single rate in a supply chain of goods and services till the goods or services reach the ultimate consumer. Its main objective is to combine all indirect tax levies into a single tax thereby replacing multiple tax levies, overcoming the

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SGST statute for every State). 2. APPLICABILITY OF GST TO ALL TRANSACTIONS The Central GST and the State GST would be applicable to all transactions of goods and services made for a consideration except the exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. 3. DESTINATION BASED MULTI POINT LEVY It is recommended that the Centre and States should adopt a consumption based GST with no distinction being made between raw materials and capital goods , in avaliment of Input tax credit. GST is based on destination principle, thus tax base will shift from production to consumption of goods. The taxable event is Consumption of goods or services. As a result, r

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ds would have indication whether it relates to Central GST or State GST (with identification of the State to whom the tax is to be credited). 6. UNIFORM PROCEDURE FOR COLLECTION OF GST To the extent feasible, uniform procedure for collection of both Central GST and State GST would be prescribed in the respective legislation for Central GST and State GST. GST is not simply VAT plus service tax, but a major improvement over the previous system of VAT and disjointed services tax – a justified step forward. GST is by far one of the most important and voluminous Indirect Taxation reform in India which has far reaching effects. GST Knowledge Series is an attempt to spread awareness of the Proposed GST Regime in clear and concise manner. It will a

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Goods and Service Tax – GST – By: – pranav deshpande – Dated:- 14-7-2015 – E-Commerce, in itself, is a taxation quagmire. The roots lie in the classic sale vs service controversy, in which the respective e-tailers could treat the transaction as a service, whereas States want to treat it as a transaction subject to State VAT. Amazon is a classic example, in which Karnataka took the lead. Even within the sales tax controversy, the next question is that of a level playing field. If the State, in which these e-tailers have set up shop, should get the State VAT, should the States, where the end subscribers are actually based, be deprived? If an e-tailer adopts the VAT model, he can always open a warehouse in the respective State and levy VAT on

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ock transfers, without something going in their kitty. From a social perspective, Governments, doubtless have to lend voice to pleas of local retailers and traditional selling outlets, whose business faces stiff competition from such e-tailers. It is likely that lobbying by a plethora of such traders will move the State Governments to enact strict laws on e-commerce. Will GST address this? To an extent, Yes. If the State of consumption gets the tax, all issues being raised by such States, will go away. Of course, the State which was demanding or getting full tax, will lose its revenue, under GST, as other States will share it. Well, as they say, you win some, you lose some CA. Pranav Deshpande E-Commerce, in itself, is a taxation quagmire.

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odel scenario. In this scenario, even if the transactions are cross border, across States, the respective litigating authority will demand full VAT, in absence of a C Form. Therein lies the additional difficulty. And let us not forget the interest and penalty part. The situation can get further complicated if States amend their respective VAT laws, to provide for taxing such transactions. Even if the taxing entry gets challenged in Courts, another front that will be opened with this, is that of jurisdiction. States, in which offices are not located or from which billing is not happening, are not going to simply allow stock transfers, without something going in their kitty. From a social perspective, Governments, doubtless have to lend voice

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Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 6-7-2015 – Goods and services tax is a tax levied on goods and services imposed at each point of sale or rendering of service. Such GST could be on entire goods and services or there could be some exempted class of goods or services or a negative list of goods and services on which GST is not levied. GST is an indirect tax in lieu of tax on goods (excise) and tax on service (service tax). The GST is just like State level VAT which is levied as tax on sale of goods. GST will be a national level value added tax applicable on goods and services. A major change in administering GST will be that the tax incidence is at the point of sale as against the present system of point of origin. According to the Task Force under the 13th Finance Commission, GST, as a well designed value added tax on all goods and services, is the most elegant method to eliminate distortions and to tax consumption. The basic objective of GST is to remov

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rned. The Government has already introduced the Bill to amend Constitution of India for Goods and Services Tax (GST) in December, 2014 in Parliament. GST is expected to play a transformative role in the way our economy functions GST will add buoyancy to economy by developing a common Indian market and reducing the cascading effect on the cost of goods and services. The Budget speech reaffirms the commitment to have GST in place from next year. The Budget speech states – I have already introduced the Bill to amend the Constitution of India for Goods and Services Tax (GST) in the last Session of this august House. GST is expected to play a transformative role in the way our economy functions. It will add buoyancy to our economy by developing a common Indian market and reducing the cascading effect on the cost of goods and services. We are moving in various fronts to implement GST from the next year. Introduction of GST is eagerly awaited by Trade and Industry. To facilitate a smooth tran

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cation cess have been subsumed in excise duty and Service Tax in the present Budget. Further, the general rate of excise duty will be rounded off from 12.36% (including cesses) to 12.5%. In case of Service Tax, it will go up from 12.36% (including cesses) to 14%. The Union Budget focuses on Goods & Services Tax (GST) covering following aspects: State of the art GST regime to be introduced GST likely to be introduced from 1st April, 2016 GST will enable leakage proof tax regime GST to play a transformative role However, no clear cut road map on GST as to how GST will be introduced from 1st April 2016 and preparedness there for. Going by the present mood, the Government of the day feels that it may be able to introduce GST in India w.e.f. 01.04.2016, replacing a host of indirect taxes presently levied by the Centre , State and Local Bodies. It hopes for the parliamentary nod (two-third majority) in the forthcoming monsoon session in July-August, 2015. This is necessary as the Indian

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expected to change the complexion of indirect taxation in India, it will also bring down the prices of goods and services across the board. The consensus among the states (29) and between the Centre and states hold the key. Once consensus is reached, GST may see the light of the day in a year s time, even during any time of the year, it being a transaction based tax. While there is no doubt that GST will come, the sooner the better, it should also address the problems in present day taxation i.e., it should seek to achieve rationalization, boost transparency, offer flexibility to Union and states and broaden the much needed tax base. If GST comes into operation, it would achieve the status of integrated and most comprehensive set off tax structure in India leading to enhanced economic activities and tax buoyancy. GST would offer a complete set off and there will be no tax cascading effect as there will be no tax on tax, an ideal proposition for all. Even the Government won t mind as t

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Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 4-7-2015 – Some of the popular GST models being practiced in various countries are as follows – United Kingdom model Value Added Tax (VAT) is a tax on consumption levied in the United Kingdom by the national government. It was introduced in 1st January, 1973 and is the third largest source of government revenue after income tax and National Insurance. Before 1973 the UK had a consumption tax called Purchase Tax, which was levied at different rates depending on the goods' luxuriousness. The general rate is 20% and reduced rate is 5%. United States of America model The United States does not impose a national-level sales or value-added tax. Sales taxes and complementary use

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l Australia follows a single GST which is a federal tax collected by Centre and distributed to States. GST was introduced in July 2010 and rate of tax is 10%. Indian situation is similar but States may not like to lose their autonomy. Malaysian model Goods and services tax (GST) in Malaysia, a value added tax, was scheduled to be implemented by the Government during the third quarter of 2011, but has not yet been implemented. The Government is still studying the possible impact of the tax. During the Government reading of the 2014 budget, Malaysian Prime Minister announced that GST @ 6% shall be imposed starting on April 1, 2015. Singapore model On the recommendation of the 1986 Economic Committee, Singapore's government decided to shif

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FEMA – 14/2015-16 – Dated:- 1-7-2015 – RBI/2015-16/83 Master Circular No. 14/2015-16 July 01, 2015 To, All Category – I Authorised Dealer Banks Madam / Sir, Master Circular on Export of Goods and Services Export of Goods and Services from India is allowed in terms of clause (a) of sub-section (1) and sub-section (3) of Section 7 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. G.S.R. 381(E) dated May 3, 2000 viz. Foreign Exchange Management (Current Account Transactions) Rules, 2000, as amended from time to time. 2. This Master Circular consolidates the existing instructions on the subject of "Export of Goods and Services from India" at one place. The list of underlying circulars/notifications consolidated in this Master Circular is furnished in Appendix. 3. This Master Circular is being updated from time to time as and when the fresh instructions are issued. The date up to which the Master Circular has been updated is suitably indicated.

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n Balances B.13 Consignment Exports B.14 Opening / Hiring of Ware houses abroad B.15 Direct dispatch of documents by the exporter B.16 Invoicing of Software Exports B.17 Short Shipments and Shut out Shipments B.18 Counter-Trade Arrangement B.19 Export of Goods on Lease, Hire, etc. B.20 Export on Elongated Credit Terms B.21 Export of goods by Special Economic Zones (SEZs) B.22 Project Exports and Service Exports B.23 Export of Currency B.24 Forfaiting B.25 Export factoring on non-recourse basis B.26 Exports to neighboring countries by Road, Rail or River B.27 Border Trade with Myanmar B.28 Repayment of State Credits B.29 Counter -Trade Arrangements with Romania PART – 3 C. Operational Guidelines for AD Category – I banks C.1 Citing of Specific Identification Numbers C.2 EDF/SOFTEX procedure C.3.1. EDF Form (Erstwhile GR and PP Form) C.3.2. Mid-Sea Trans-Shipment of catch by Deep Sea Fishing Vessels C.4 In case of export of goods / software taking place through EDI ports C.5 SOFTEX Forms

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xport Proceeds C.27 Exporters' Caution List PART – 4 Annex-1 – Current Account Transaction Rules Annex-2 – Form EFC Annex- 3 – Common SOFTEX Form Annex- 4 – Revised SOFTEX Procedure Annex -5 – Delay in Utilization of Advance Received for Exports Appendix PART-1 A. Introduction (i) Export trade is regulated by the Directorate General of Foreign Trade (DGFT) and its regional offices, functioning under the Ministry of Commerce and Industry, Department of Commerce, Government of India. Policies and procedures required to be followed for exports from India are announced by the DGFT, from time to time. (ii) AD Category – I banks may conduct export transactions in conformity with the Foreign Trade Policy in vogue and the Rules framed by the Government of India and the Directions issued by Reserve Bank from time to time. In exercise of the powers conferred by clause (a) of sub-section (1) and sub-section (3) of Section 7 and sub-section (2) of Section 47 of the Foreign Exchange Management

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specified conditions. (v) There is no restriction on invoicing of export contracts in Indian Rupees in terms of the Rules, Regulations, Notifications and Directions framed under the Foreign Exchange Management Act 1999. Further, in terms of Para 2.52 of the Foreign Trade Policy (2015-2020) – All export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall be realized in freely convertible currency. However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely convertible Vostro account of a non resident bank situated in any country other than a member country of Asian Clearing Union (ACU) or Nepal or Bhutan. Indian Rupee is not a freely convertible currency, as yet. (vi) Any reference to the Reserve Bank should first be made to the Regional Office of the Foreign Exchange Department situated in the jurisdiction where the applicant person resides, or the firm / comp

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ng three financial years subject to a ceiling of ₹ 5 lakhs. For status holder exporters, the limit as per the present Foreign Trade Policy is ₹ 10 lakhs or 2 per cent of the average annual export realization during the preceding three licensing years (April-March), whichever is higher. Exports of goods not involving any foreign exchange transaction directly or indirectly requires the waiver of EDF procedure from the Reserve Bank. B.2 Manner of Receipt and Payment (i) The amount representing the full export value of the goods exported shall be received through an AD Bank in the manner specified in the Foreign Exchange Management (Manner of Receipt & Payment) Regulations, 2000 notified vide Notification No. FEMA.14/2000-RB dated May 3, 2000 in the following manner: a. Bank draft, pay order, banker's or personal cheques. b. Foreign currency notes/foreign currency travelers cheques from the buyer during his visit to India. c. Payment out of funds held in the FCNR/NRE ac

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pal, where the importer has been permitted by the Nepal Rashtra Bank to make payment in free foreign exchange, such payments shall be routed through the ACU mechanism. b. In precious metals i.e. Gold / Silver / Platinum by the Gem & Jewellery units in SEZs and EOUs, equivalent to value of jewellery exported on the condition that the sale contract provides for the same and the approximate value of the precious metals is indicated in the relevant EDF Forms. (iii) Processing of export related receipts through Online Payment Gateway Service Providers (OPGSPs) Authorised Dealer Category – I (AD Category – I) banks have been allowed to offer the facility of repatriation of export related remittances by entering into standing arrangements with Online Payment Gateway Service Providers (OPGSPs) subject to the following conditions – a. The AD Category-I banks offering this facility shall carry out the due diligence of the OPGSP. b. This facility shall only be available for export of goods an

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d charge back to the importer where the exporter has failed in discharging his obligations under the sale contract. f. The balances held in the NOSTRO collection account shall be repatriated and credited to the respective exporter's account with a bank in India immediately on receipt of the confirmation from the importer and, in no case, later than seven days from the date of credit to the NOSTRO collection account. g. AD Category -I banks shall satisfy themselves as to the bona-fides of the transactions and ensure that the purpose codes reported to the Reserve Bank in the online payment gateways are appropriate. h. AD Category -I banks shall submit all the relevant information relating to any transaction under this arrangement to the Reserve Bank, as and when advised to do so. i. Each NOSTRO collection account should be subject to reconciliation and audit on a quarterly basis. j. Resolution of all payment related complaints of exporters in India shall remain the responsibility of

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ngly, the Asian Monetary Unit (AMU) shall be denominated as 'ACU Dollar' and 'ACU Euro' which shall be equivalent in value to one US Dollar and one Euro, respectively. b) Further, AD Category – I banks are allowed to open and maintain ACU Dollar and ACU Euro accounts with their correspondent banks in other participating countries. All eligible payments are required to be settled by the concerned banks through these accounts. c) Relaxation from ACU Mechanism- Indo-Myanmar Trade – Trade transactions with Myanmar can be settled in any freely convertible currency in addition to the ACU mechanism. d) In view of the difficulties being experienced by importers/exporters in payments to / receipts from Iran, it has been decided that with effect from December 27, 2010, all eligible current account transactions including trade transactions with Iran should be settled in any permitted currency outside the ACU mechanism, until further notice. (v) Third party payments for export / im

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d in the EDF; d. It would be responsibility of the Exporter to realize and repatriate the export proceeds from such third party named in the EDF; e. Reporting of outstanding, if any, in the XOS would continue to be shown against the name of the exporter. However, instead of the name of the overseas buyer from where the proceeds have to be realized, the name of the declared third party should appear in the XOS; f. In case of shipments being made to a country in Group II of Restricted Cover Countries, (e.g. Sudan, Somalia, etc.), payments for the same may be received from an Open Cover Country; and g. In case of imports, the Invoice should contain a narration that the related payment has to be made to the (named) third party, the Bill of Entry should mention the name of the shipper as also the narration that the related payment has to be made to the (named) third party and the importer should comply with the related extant instructions relating to imports including those on advance payme

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dent in India) Regulations, 2000 notified vide Notification No. FEMA 10/2000-RB dated May 3, 2000 for opening a temporary foreign currency account abroad. Exporters may deposit the foreign exchange obtained by sale of goods at the international exhibition/trade fair and operate the account during their stay outside India provided that the balance in the account is repatriated to India through normal banking channels within a period of one month from the date of closure of the exhibition/trade fair and full details are submitted to the AD Category – I banks concerned. (ii) Reserve Bank may consider applications in Form EFC (Annex 2) from exporters having good track record for opening a foreign currency account with banks in India and outside India subject to certain terms and conditions. Applications for opening the account with a branch of an AD Category – I bank in India may be submitted through the branch at which the account is to be maintained. If the account is to be maintained ab

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itions in the Memorandum PEM. B.5 Diamond Dollar Account (DDA) (i) Under the scheme of Government of India, firms and companies dealing in purchase / sale of rough or cut and polished diamonds / precious metal jewellery plain, minakari and / or studded with / without diamond and / or other stones, with a track record of at least 2 years in import / export of diamonds / colored gemstones / diamond and colored gemstones studded jewellery / plain gold jewellery and having an average annual turnover of ₹ 3 crores or above during the preceding three licensing years (licensing year is from April to March) are permitted to transact their business through Diamond Dollar Accounts. (ii) They may be allowed to open not more than five Diamond Dollar Accounts with their banks. (iii) Eligible firms and companies may apply for permission to their AD Category – I banks in the format prescribed. (iv) AD Category-I banks are required to submit quarterly reports to the Foreign Exchange Department,

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ent in India) Regulations, 2000 notified under Notification No. FEMA 10/2000-RB dated May 3, 2000 as amended from time to time. (ii) Resident individuals are permitted to include resident close relative(s) as defined in the Companies Act 1956 as a joint holder(s) in their EEFC bank accounts on former or survivor basis. (iii) This account shall be maintained only in the form of non-interest bearing current account. No credit facilities, either fund-based or non-fund based, shall be permitted against the security of balances held in EEFC accounts by the AD Category – I banks. (iv) All categories of foreign exchange earners are allowed to credit 100% of their foreign exchange earnings to their EEFC Accounts subject to the condition that a) The sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments.

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onomic Zone out of its foreign currency account. (vii) AD Category – I banks may permit their exporter constituents to extend trade related loans / advances to overseas importers out of their EEFC balances without any ceiling subject to compliance of provisions of Notification No. FEMA 3/2000-RB dated May 3, 2000 as amended from time to time. (viii) AD Category – I banks may permit exporters to repay packing credit advances whether availed in Rupee or in foreign currency from balances in their EEFC account and / or Rupee resources to the extent exports have actually taken place. B.7 Setting up of Offices Abroad and Acquisition of Immovable Property for Overseas Offices (i) At the time of setting up of the office, AD Category – I banks may allow remittances towards initial expenses up to fifteen per cent of the average annual sales/income or turnover during the last two financial years or up to twenty-five per cent of the net worth, whichever is higher. (ii) For recurring expenses, remi

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ptly reported to the AD Bank. (iv) AD Category – I banks may also allow remittances by a company incorporated in India having overseas offices, within the above limits for initial and recurring expenses, to acquire immovable property outside India for its business and for residential purpose of its staff. (v) The overseas office / branch of software exporter company/firm may repatriate to India 100 per cent of the contract value of each off-site contract. (vi) In case of companies taking up on site contracts, they should repatriate the profits of such on site contracts after the completion of the said contracts. (vii) An audited yearly statement showing receipts under off-site and on-site contracts undertaken by the overseas office, expenses and repatriation thereon may be sent to the AD Category – I banks. B.8 Advance Payments against Exports (1) In terms of Regulation 16 of Notification No. FEMA 23/2000-RB dated May 3, 2000, where an exporter receives advance payment (with or without

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to be utilized for execution of long term supply contracts for export of goods subject to the conditions as under: (i) Firm irrevocable supply orders and contracts should be in place. Product pricing should be in consonance with prevailing international prices. (ii) Company should have capacity, systems and processes in place to ensure that the orders over the duration of the said tenure can actually be executed. (iii) The facility is to be provided only to those entities, which have not come under the adverse notice of Enforcement Directorate or any such regulatory agency or have not been caution listed. (iv) Such advances should be adjusted through future exports. (v) The rate of interest payable, if any, should not exceed LlBOR plus 200 basis points. (vi) The documents should be routed through one Authorized Dealer bank only. (vii) Authorised Dealer bank should ensure compliance with AML / KYC guidelines (viii) Such export advances shall not be permitted to be used to liquidate Rupe

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ranch / subsidiary of bank in India. Note: AD Category – I banks may also be guided by the Master Circular on Guarantees and Co-acceptances issued by DBR. (xii) AD Category – I banks may allow the purchase of foreign exchange from the market for refunding advance payment credited to EEFC account only after utilizing the entire balances held in the exporter s EEFC accounts maintained at different branches/banks. (3) AD Category- I banks may allow exporters to receive advance payment for export of goods which would take more than one year to manufacture and ship and where the export agreement provides for shipment of goods extending beyond the period of one year from the date of receipt of advance payment subject to the following conditions:- (i) The KYC and due diligence exercise has been done by the AD Category – I bank for the overseas buyer; (ii) Compliance with the Anti-Money Laundering standards has been ensured; (iii) The AD Category-I bank should ensure that export advance receiv

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ng outstanding beyond the stipulated period on account of non-performance of such exports (shipments in case of export of goods), AD Category -I banks are advised to efficiently follow up with the concerned exporters in order to ensure that export performance (shipments in case of export of goods) are completed within the stipulated time period. (ii) It is further reiterated that AD category -I banks should exercise proper due diligence and ensure compliance with KYC and AML guidelines so that only bonafide export advances flow into India. Doubtful cases as also instances of chronic defaulters may be referred to Directorate of Enforcement (DoE) for further investigation. A quarterly statement indicating details of such cases (as per Annex -5) may be forwarded to the concerned Regional Offices of RBI within 21 days from the end of each quarter. B.9 EDF Approval for Trade Fair/Exhibitions abroad 1. Firms / Companies and other organizations participating in Trade Fair/Exhibition abroad ca

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roceeds to India. (iv) Such transactions approved by the AD Category – I banks will be subject to 100 per cent audit by their internal inspectors/auditors. B.10 EDF approval for Export of Goods for re-imports (i) AD Category – I banks may consider request from exporters for granting EDF approval in cases where goods are being exported for re-import after repairs / maintenance / testing / calibration, etc., subject to the condition that the exporter shall produce relative Bill of Entry within one month of re-import of the exported item from India. (ii) Where the goods being exported for testing are destroyed during testing, AD Category – I banks may obtain a certificate issued by the testing agency that the goods have been destroyed during testing, in lieu of Bill of Entry for import. B.11 Re-export of unsold rough diamonds from Special Notified Zone of Customs without Export Declaration Form (EDF) formality (i) In order to facilitate re-export of unsold rough diamonds imported on free

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due to differences in weight, quality, etc., to be ascertained after arrival and inspection, weighment or analysis of the goods. In such cases, AD Category – I banks may negotiate the bills, provided: a. The amount of undrawn balance is considered normal in the particular line of export trade, subject to a maximum of 10 per cent of the full export value. b. An undertaking is obtained from the exporter on the duplicate of EDF forms that he will surrender/account for the balance proceeds of the shipment within the period prescribed for realization. (ii) In cases where the exporter has not been able to arrange for repatriation of the undrawn balance in spite of best efforts, AD Category – I banks, on being satisfied with the bona fides of the case, should ensure that the exporter has realized at least the value for which the bill was initially drawn (excluding undrawn balances) or 90 per cent of the value declared on EDF form, whichever is more and a period of one year has elapsed from th

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inal except in case of petty items like postage/cable charges, stamp duty, etc. (iv) In case the goods are exported on consignment basis, freight and marine insurance must be arranged in India. (v) AD Category – I banks may allow the exporters to abandon the books, which remain unsold at the expiry of the period of the sale contract. Accordingly, the exporters may show the value of the unsold books as deduction from the export proceeds in the Account Sales. B.14 Opening / Hiring of Ware houses abroad AD Category – I banks may consider the applications received from exporters and grant permission for opening / hiring warehouses abroad subject to the following conditions: (i) Applicant s export outstanding does not exceed 5 per cent of exports made during the previous financial year. (ii) Applicant has a minimum export turnover of USD 100,000/- during the last financial year. (iii) Period of realization should be as applicable. (iv) All transactions should be routed through the designate

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o the request of the exporter provided the exporter is a regular customer and the AD Category – I bank is satisfied, on the basis of standing and track record of the exporter and arrangements have been made for realization of export proceeds. 2. AD Category – I banks may also permit 'Status Holder Exporters (as defined in the Foreign Trade Policy), and units in Special Economic Zones (SEZ) to dispatch the export documents to the consignees outside India subject to the terms and conditions that: (i) The export proceeds are repatriated through the AD banks named in the EDF. (ii) The duplicate copy of the EDF is submitted to the AD banks for monitoring purposes, by the exporters within 21 days from the date of shipment of export. 3. AD Category – I banks may regularize cases of dispatch of shipping documents by the exporter direct to the consignee or his agent resident in the country of the final destination of goods, up to USD 1 million or its equivalent, per export shipment, subject

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mit a combined SOFTEX form for all the invoices raised on a particular overseas client, including advance remittances received in a month. (ii) Contracts involving only one-shot operation , the invoice/bill should be raised within 15 days from the date of transmission. (iii) The exporter should submit declaration in Form SOFTEX in quadruplicate in respect of export of computer software and audio / video / television software to the designated official concerned of the Government of India at STPI / EPZ /FTZ /SEZ for valuation / certification not later than 30 days from the date of invoice / the date of last invoice raised in a month, as indicated above. The designated officials may also certify the SOFTEX Forms of EOUs, which are registered with them. (iv) The invoices raised on overseas clients as at (i) and (ii) above will be subject to valuation of export declared on SOFTEX form by the designated official concerned of the Government of India and consequent amendment made in the invoi

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original EDF received earlier from Customs will be cancelled. If the shipment is made subsequently, a fresh set of EDF should be completed B.18 Counter-Trade Arrangement Counter trade proposals involving adjustment of value of goods imported into India against value of goods exported from India in terms of an arrangement voluntarily entered into between the Indian party and the overseas party through an Escrow Account opened in India in US Dollar will be considered by the Reserve Bank subject to following conditions: (i) All imports and exports under the arrangement should be at international prices in conformity with the Foreign Trade Policy and Foreign Exchange Management Act, 1999 and the Rules and Regulations made there under. (ii) No interest will be payable on balances standing to the credit of the Escrow Account but the funds temporarily rendered surplus may be held in a short-term deposit up to a total period of three months in a year (i.e., in a block of 12 months) and the ba

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sideration to the Regional Office concerned of the Reserve Bank. B.21 Export of goods by Special Economic Zones (SEZs) (i) Units in SEZs are permitted to undertake job work abroad and export goods from that country itself subject to the conditions that: a. Processing / manufacturing charges are suitably loaded in the export price and are borne by the ultimate buyer. b. The exporter has made satisfactory arrangements for realization of full export proceeds subject to the usual EDF procedure. AD Category – I banks may permit units in DTAs to purchase foreign exchange for making payment for goods supplied to them by units in SEZs. (ii) Export of Services by Special Economic Zones (SEZs) to DTA Unit. Authorised Dealer Banks are permitted to sell foreign exchange to a unit in the DTA for making payment in foreign exchange to a unit in the SEZ for the services rendered by it (i.e. a unit in SEZ) to a DTA unit. It must be ensured that in the Letter of Approval (LoA) issued to the SEZ unit by

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monetary limit and permit subsequent changes in the terms of post award approval within the relevant FEMA guidelines / regulations. Project and service exporters may approach AD banks / Exim Bank based on their commercial judgment. The respective AD bank / Exim Bank should monitor the projects for which post-award approval has been granted by them. (iii) The stipulation of time limit of 30 days for the exporter undertaking Project Exports and Service contracts abroad to submit form DPX1/ PEX-1 /TCS-1 to the Approving Authority (AA) for seeking post award approval will not apply henceforth. (iv) In order to provide greater flexibility to project & service exporters in conducting their overseas transactions, facilities have been provided as under: (a) Inter-Project Transfer of Machinery The stipulation regarding recovery of market value (not less than book value) of the machinery, etc., from the transferee project has been withdrawn. Further, exporters may use the machinery / equipm

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ing of which should be at least A-1/AAA by Standard & Poor or P-1/Aaa by Moody s or F1/AAA by Fitch IBCA etc., ,and as deposits with branches / subsidiaries outside India of AD Category – I banks in India. (d) Repatriation of Funds in case of On-site Software Contracts The requirement of repatriation of 30 per cent of contract value in respect of on-site contracts by software Exporter Company / firm has been dispensed with. They should, however, repatriate the profits of on-site contracts after completion of the contracts. B.23 Export of Currency In terms of Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 notified vide Notification No. FEMA 6/ 2000-RB dated 3rd May 2000, as amended from time to time, permission of Reserve Bank is required for any export of Indian currency except to the extent permitted under any general permission granted under the Regulations as under: (i) Any person resident in India may take outside India (other than to Nepal and Bh

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oncerned. B.25 Export factoring on non-recourse basis Taking into account the recommendation made by the Technical Committee on Facilities and Services to the Exporters (Chairman: Shri G. Padmanabhan), it has been decided to permit AD banks to factor the export receivables on a non-recourse basis, so as to enable the exporters to improve their cash flow and meet their working capital requirements subject to conditions as under: AD banks may take their own business decision to enter into export factoring arrangement on non-recourse basis. They should ensure that their client is not over financed. Accordingly, they may determine the working capital requirement of their clients taking into account the value of the invoices purchased for factoring. The invoices purchased should represent genuine trade invoices. In case the export financing has not been done by the Export Factor, the Export Factor may pass on the net value to the financing bank/ Institution after realising the export procee

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s station at the border through which the vessel or vehicle has to pass before crossing over to the foreign territory. For this purpose, exporter may arrange either to give the form to the person in charge of the vessel or vehicle or forward it to his agent at the border for submission to Customs. (ii) As regards exports by rail, Customs staff has been posted at certain designated railway stations for attending to Customs formalities. They will collect the EDF for goods loaded at these stations so that the goods may move straight on to the foreign country without further formalities at the border. The list of designated railway stations can be obtained from the Railways. For goods loaded at stations other than the designated stations, exporters must arrange to present EDF to the Customs Officer at the Border Land Customs Station where Customs formalities are completed. B.27 Border Trade with Myanmar This is governed by the Agreement on Border Trade between India and Myanmar. People liv

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within six months from the date of credit to Escrow Accounts allowed to be opened. PART – 3 C. Operational Guidelines for AD Category – I banks C.1 Citing of Specific Identification Numbers In all applications / correspondence with the Reserve Bank, the specific identification number as available on the EDF and SOFTEX forms should invariably be cited. C.2 EDF/SOFTEX procedure In terms of Regulation 6 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 notified vide Notification No. FEMA.23/2000-RB dated 3rd May 2000, as amended from time to time export declaration forms should be disposed of as under: C.3.1. EDF Form i) The procedure relating to the exports of goods through EDI ports will remain the same. However, the requirement of declaring the exports of goods / software in the SDF in case of exports taking place through the EDI ports has been dispensed with as the mandatory statutory requirements contained in the erstwhile SDF have been subsumed in the

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he quantity passed for shipment on the duplicate copy, Customs will return it to the exporter for submission to the AD Category – I banks for negotiation or collection of export bills. (viii) Within 21 days from the date of export, exporter should lodge the duplicate copy together with relative shipping documents and an extra copy of the invoice with the AD Category – I banks named in the EDF form. (ix) After the documents have been negotiated / sent for collection, the AD Category – I banks should report the transaction through Export Data Processing and Monitoring System (EDPMS) to the Reserve Bank. (x) The duplicate copy of the form together with a copy of invoice etc. shall be retained by the AD Category – I banks and may not be submitted to the Reserve Bank. (xi) In the case of exports made under deferred credit arrangement or to joint ventures abroad against equity participation or under rupee credit agreement, the number and date of the Reserve Bank approval and/or number and da

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al copy to the exporter, who should submit the form to the post office with the parcel. (b) The duplicate copy of the EDF form will be retained by the AD banks to whom the exporter should submit relevant documents together with an extra copy of invoice for negotiation/collection, within the prescribed period of 21 days. (c) The concerned overseas branch or correspondent should be instructed to deliver the parcel to consignee against payment or acceptance of relative bill. (d) AD Category – I banks may, however, countersign EDF forms covering parcels addressed direct to the consignees, provided: (e) An irrevocable letter of credit for the full value of the export has been opened in favor of the exporter and has been advised through the AD Category – I banks concerned. Or The full value of the shipment has been received in advance by the exporter through an AD Category – I banks. Or The AD Category – I bank is satisfied, on the basis of the standing and track record of the exporter and t

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is regard has been rationalized in consultation with the Government of India as outlined below should be followed by the exporter in conformity with Regulation 3 of Notification No.FEMA.23/2000-RB dated May 3, 2000. (a) The exporters may submit the EDF, duly signed by the Master of the Vessel in lieu of Custom Certification, indicating the composition of the catch, quantity, export value, date of transfer of catch, etc. (b) The date of transfer of catch may be indicated in the column for Date of Shipment with suitable remarks. (c) Bill of Lading / Receipt of Trans-shipment issued by the carrier vessel should include the EDF Number. (d) The EDF should be duly supported by a certificate from an international cargo surveyor. (e) The prescribed period of realization and repatriation should be reckoned with reference to the date of transfer of catch as certified by the Master of the Vessel or the date of the invoice, whichever is earlier. (f) The EDF, both original and duplicate, should ind

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Commissioner of Customs concerned. (ii) After verifying and authenticating, the Commissioner of Customs will hand over to the exporter, one copy of the shipping bill marked Exchange Control Copy for being submitted to the AD Category – I banks within 21 days from the date of export. (iii) The AD Category – I banks should accept the Exchange Control (EC) copy of the shipping bill submitted by the exporter for collection/negotiation of shipping documents. (iv) The manner of disposal of EC copy of Shipping Bill is the same as that for EDF. The duplicate copy of the form together with a copy of invoice etc. shall be retained by the AD Category – I banks and may not be submitted to the Reserve Bank. (v) In cases where ECGC and private insurance companies regulated by Insurance Regulatory and Development Authority (IRDA) initially settles the claims of exporters in respect of exports insured with them and subsequently receives the export proceeds from the buyer/buyer s country through the ef

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tails. Software companies will submit all the documents on demand to STPI within 30 days of their advice or any reasonable/extended time at the discretion of the Director, STPI, at the request from the exporter. STPI will thus certify the statement and SOFTEX forms in bulk on the Top Sheet regarding the values etc. and will thereafter forward the first copy of the revised SOFTEX format to the concerned Regional Office of RBI, the duplicate copy along with bulk statement in excel format to Authorised Dealers for negotiation / collection / settlement, the third copy to the exporter and the last copy will be retained by STPI for its own record. Under the revised procedure, the exporters, however, will have to provide information about all the invoices including the ones lesser than US$25000, in the bulk statement in excel format. [The revised procedure for submission of the SOFTEX form and other relevant documents are detailed in the Annex 4] The procedure has been effective at all STPIs

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Proceeds amounting to …… representing ….. percent of the export realization credited to the EEFC account maintained by the exporter with…… C.8 Consolidation of Air Cargo/Sea Cargo (i) Consolidation of Air Cargo (a) Where air cargo is shipped under consolidation, the airline company s Master Airway Bill will be issued to the Consolidating Cargo Agent. The Cargo agent in turn will issue his own House Airway Bills (HAWBs) to individual shippers. (b) AD Category – I banks may negotiate HAWBs only if the relative letter of credit specifically provides for negotiation of these documents in lieu of Airway Bills issued by the airline company. (ii) Consolidation of Sea Cargo (a) AD Category – I banks may accept Forwarder s Cargo Receipts (FCR) issued by IATA approved agents, in lieu of bills of lading, for negotiation / collection of shipping documents, in respect of export transactions backed by letters of credit, if the relative letter of credit specifically

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porters to ensure due diligence on the overseas buyer, in such cases. C.9 Delay in submission of shipping documents by exporters In cases where exporters present documents pertaining to exports after the prescribed period of 21 days from date of export, AD Category – I banks may handle them without prior approval of the Reserve Bank, provided they are satisfied with the reasons for the delay. C.10 Return of Documents to Exporters The duplicate copies of EDF and shipping documents, once submitted to the AD Category – I banks for negotiation, collection, etc., should not ordinarily be returned to exporters, except for rectification of errors and resubmission. C.11 Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/Trade Representative AD Category – I banks may deliver one negotiable copy of the Bill of Lading to the Master of the carrying vessel or trade representative for exports to certain landlocked countries if the shipment is covered by an irrevocable letter of credi

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the delay in realizing the proceeds. (ii) The duplicate copies of EDF/SOFTEX Forms should, continue to be held by AD Category – I banks until the full proceeds are realized, except in case of undrawn balances. (iii) AD Category – I banks should follow up export outstanding with exporters systematically and vigorously so that action against defaulting exporters does not get delayed. Any laxity in the follow up of realization of export proceeds by AD Category – I banks will be viewed seriously by the Reserve Bank, leading to the invocation of the penal provision under FEMA, 1999. (iv) With operationalization of EDPMS on March 01, 2014, realization of all export transaction for shipping documents after February 28, 2014 should be reported in EDPMS and old outstanding shipping bills prior to March 01, 2014 should continue to be reported in XOS till completion of the cycle. C.14 Reduction in Invoice Value on Account of Prepayment of Usance Bills Occasionally, exporters may approach AD Categ

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vailed of, if any. (ii) In the case of exporters who have been in the export business for more than three years, reduction in invoice value may be allowed, without any percentage ceiling, subject to the above conditions as also subject to their track record being satisfactory, i.e., the export outstanding do not exceed 5 per cent of the average annual export realization during the preceding three financial years. (iii) For the purpose of reckoning the percentage of export bills outstanding to the average export realizations during the preceding three financial years, outstanding of exports made to countries facing externalization problems may be ignored provided the payments have been made by the buyers in the local currency. C.16 Export Claims (i) AD Category – I banks may remit export claims on application, provided the relative export proceeds have already been realized and repatriated to India and the exporter is not on the caution list of the Reserve Bank. (ii) In all such cases o

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Central Bureau of Investigation or other investigating agencies, (b) The AD Category – I bank is satisfied that the exporter has not been able to realize export proceeds for reasons beyond his control, (c) The exporter submits a declaration that the export proceeds will be realized during the extended period, (d) While considering extension beyond one year from the date of export, the total outstanding of the exporter does not exceed USD one million or 10 per cent of the average export realizations during the preceding three financial years, whichever is higher. (e) All the export bills outstanding beyond six months from the date of export may be reported in XOS statement. However, where extension of time has been granted by the AD Category – I banks, the date up to which extension has been granted may be indicated in the Remarks column. (f) In cases where the exporter has filed suits abroad against the buyer, extension may be granted irrespective of the amount involved / outstanding.

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July 2010. After liberalizing and simplifying the procedure, the limits prescribed for write-offs of unrealized export bills are as under: Self write-off by an exporter (Other than Status Holder Exporter) 5%* Self write-off by Status Holder Exporters 10%* Write-off by Authorized Dealer Bank- 10%* *of the total export proceeds realized during the previous calendar year. (ii) The above limits will be related to total export proceeds realized during the previous calendar year and will be cumulatively available in a year. (iii) The above write-off will be subject to conditions that the relevant amount has remained outstanding for more than one year, satisfactory documentary evidence is furnished in support of the exporter having made all efforts to realize the dues, and the case falls under any of the undernoted categories: (a) The overseas buyer has been declared insolvent and a certificate from the official liquidator indicating that there is no possibility of recovery of export proceed

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l and the actual freight charges but the amounts have remained unrealized consequent on dishonor of the bills by the overseas buyer and there are no prospects of realization. (iv) The exporter has surrendered proportionate export incentives (for the cases not covered under A. P. (DIR. Series) Circular No.03 dated July 22, 2010), if any, availed of in respect of the relative shipments. The AD Category – I banks should obtain documents evidencing surrender of export incentives availed of before permitting the relevant bills to be written off. (v) In case of self-write-off, the exporter should submit to the concerned AD bank, a Chartered Accountant s certificate, indicating the export realization in the preceding calendar year and also the amount of write-off already availed of during the year, if any, the relevant EDF to be written off, Bill No., invoice value, commodity exported, country of export. The CA certificate may also indicate that the export benefits, if any, availed of by the

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ove limits, may be referred to the concerned Regional Office of Reserve Bank of India. C.20 Write off in cases of Payment of Claims by ECGC and private insurance companies regulated by Insurance Regulatory and Development Authority (IRDA) (i) AD Category – I banks shall, on an application received from the exporter supported by documentary evidence from the ECGC and private insurance companies regulated by IRDA confirming that the claim in respect of the outstanding bills has been settled by them, write off the relative export bills and delete them from the XOS statement. (ii) Such write-off will not be restricted to the limit of 10 per cent indicated above. (iii) Surrender of incentives, if any, in such cases will be as provided in the Foreign Trade Policy. (iv) The claims settled in rupees by ECGC and private insurance companies regulated by IRDA should not be construed as export realization in foreign exchange. C.21 Write-off – Relaxation As announced in the Foreign Trade Policy (FT

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r overseas branch/correspondent and release the duplicate copy of EDF only after the amount has been collected. (iii) A certificate for the amount of claim received should be furnished on the reverse of the duplicate copy. (iv) AD Category – I banks should ensure that amounts of claims on shipments lost in transit which are partially settled directly by shipping companies/airlines under carrier s liability abroad are also repatriated to India by exporters. C.23 Netting off of export receivables against import payments – Units in Special Economic Zones (SEZs) AD Category – I banks may allow requests received from exporters for netting off of export receivables against import payments for units located in Special Economic Zones subject to the following: (i) The netting off of export receivables against import payments is in respect of the same Indian entity and the overseas buyer / supplier (bilateral netting) and the netting may be done as on the date of balance sheet of the unit in SEZ

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Bills and Exchange Control copies of Bills of Entry for home consumption have been submitted by the importer to the Authorized Dealer bank. (iii) Payment for the import is still outstanding in the books of the importer. (iv) Both the transactions of sale and purchase may be reported separately in R Returns. (v) The relative EDF will be released by the AD bank only after the entire export proceeds are adjusted / received. (vi) The set-off of export receivables against import payments should be in respect of the same overseas buyer and supplier and that consent for set-off has been obtained from him. (vii) The export / import transactions with ACU countries should be kept outside the arrangement. (viii) All the relevant documents are submitted to the concerned AD bank who should comply with all the regulatory requirements relating to the transactions. C.25 Agency Commission on Exports (i) AD Category – I banks may allow payment of commission, either by remittance or by deduction from in

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itions as at (a) and (b) stipulated in paragraph (i) above. (b) The commission is not payable to Escrow Account holders themselves. (c) The commission should not be allowed by deduction from the invoice value. (iii) Payment of commission is prohibited on exports made by Indian Partners towards equity participation in an overseas joint venture / wholly owned subsidiary as also exports under Rupee Credit Route except commission up to 10 per cent of invoice value of exports of tea & tobacco. C.26 Refund of Export Proceeds AD Category – I banks, through whom the export proceeds were originally realized may consider requests for refund of export proceeds of goods exported from India and being re-imported into India on account of poor quality. While permitting such transactions, AD Category – I banks are required to: (i) Exercise due diligence regarding the track record of the exporter (ii) Verify the bona-fides of the transactions (iii) Obtain from the exporter a certificate issued by D

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he full export value and also permits such drawings and the usance bill mature within twelve months from the date of shipment. (iii) AD Category – I banks should obtain prior approval of the Reserve Bank for issuing guarantees for caution-listed exporters. Annex – 1 -Foreign Exchange Management (Current Account Transactions) Rules, 2000 Annex-2 – Form EFC Annex 3- Common SOFTEX Form Annex-4- Revised SOFTEX Procedure Annex 5- Quarterly Statement showing details of overdue Export Advances Appendix List of Circulars which have been consolidated in the Master Circular on Export of Goods and Services Sr. No Circular No. Subject Date 1 A.D. (MA Series) Circular No.15 May 31, 1993 2 A.P. (DIR Series) Circular No.12 Foreign Exchange Management Act 1999 – Export of Goods and Services September 9, 2000 3 A.P.(DIR Series) Circular No.6 Exchange Earners' Foreign Currency (EEFC) Account Scheme August 14,2000 4 A.P.(DIR Series) Circular No.16 Exchange Earners' Foreign Currency (EEFC) Account

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. (DIR Series) Circular No.9 Export of Goods and Services – Certification of SOFTEX Forms October 25, 2001 15 A.P. (DIR Series) Circular No.10 Asian Clearing Union (ACU) Mechanism – Exports to Nepal November 1, 2001 16 A.P. (DIR Series) Circular No.20 Export of goods & services -Extension of period of realization January 28, 2002 17 A.P. (DIR Series) Circular No.30 Export of Goods for Exhibition / Trade Fairs outside India March 26, 2002 18 A.P. (DIR Series) Circular No.34 Facilities to Status Holder Exporters-Credit to the EEFC account April 1, 2002 19 A.P. (DIR Series) Circular No.35 Export of Goods and Services -Facilities to Status Holder Exporters April 1, 2002 20 A.P. (DIR Series) Circular No.38 Foreign Exchange Management Act, 1999 – Export of goods and services – Reduction in value April 12, 2002 21 A.P. (DIR Series) Circular No.53 Use of Credit Cards AP (DIR Series) Circular No.53 (June 27, 2002) June 27, 2002 22 A.P. (DIR Series) Circular No.54 Maintenance of foreign curr

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Series) Circular No.41 Issue of Corporate Guarantee in lieu of Bid Bond Guarantee November 8, 2002 32 A.P. (DIR Series) Circular No.61 "Write-off" of unrealized export bills-Surrender of export incentives December 14, 2002 33 A.P. (DIR Series) Circular No.62 Exchange Earners' Foreign Currency (EEFC) Account Scheme December 17, 2002 34 A.P. (DIR Series) Circular No.71 Acquisition of immovable property outside India- Branches/trading offices overseas January 13, 2003 35 A.P.(DIR Series) Circular No.76 R-Return and Guide to Authorised Dealers for Compilation of R Returns – Submission of Documents / Statements/ Schedules – Discontinuation February 3, 2003 36 A.P. (DIR Series) Circular No.78 Exchange Earners Foreign Currency (EEFC) Account Scheme February 14, 2003 37 A.P. (DIR Series) Circular No.91 Export of Goods and Services – Facilities to Units in Special Economic Zones (SEZs) April 1, 2003 38 A.P. (DIR Series) Circular No.94 Export of Goods and Services – Export of goods

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(DIR Series) Circular No.30 Export of Goods and Services October 21, 2003 48 A.P. (DIR Series) Circular No.32 Export of Goods and Services – Project Exports October 28, 2003 49 A.P. (DIR Series) Circular No.40 Export of Goods and Services – Liberalization December 5, 2003 50 A.P. (DIR Series) Circular No.61 Exemption from Declaration of Export of Goods and Software – January 31, 2004 51 A.P. (DIR Series) Circular No.68 Export of Goods and Services – Liberalization February 11, 2004 52 A.P. (DIR Series) Circular No.73 Export of Goods by way of Gifts – Liberalization – February 20, 2004 53 A.P. (DIR Series) Circular No.77 Foreign Exchange Management Act, 1999 – Guidelines for Compilation of R-Returns March 13, 2004 54 A.P. (DIR Series) Circular No.94 Exchange Earners' Foreign Currency (EEFC) Account Scheme – Trade Related Loans/Advances June 7, 2004 55 A.P. (DIR Series) Circular No.96 Exchange Earner's Foreign Currency (EEFC) Account Scheme – Liberalization – June 15, 2004 56 A.

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30, 2006 65 A.P. (DIR Series) Circular No.18 Establishment of Offices Abroad December 4, 2006 66 A.P. (DIR Series) Circular No.26 Liberalizations in Project and Service Exports January 8, 2007 67 A.P. (DIR Series) Circular No.33 Liberalization of Export and Import procedures February 28, 2007 68 A.P. (DIR Series) Circular No.37 Export of Goods and Services Refund of Export Proceeds – Liberalization April 5, 2007 69 A.P. (DIR Series) Circular No.71 Data on Project Export Finance June 8, 2007 70 A.P. (DIR Series) Circular No.13 Exchange Earner's Foreign Currency (EEFC) Account- Liberalization October 6, 2007 71 A.P. (DIR Series) Circular No.30 Compilation of Bank-wide consolidated R-Return February 25,2008 72 A.P. (DIR Series) Circular No.49 Export of Goods and Services – Payments of Claims by Insurance Companies-Write off June 3, 2008 73 A.P. (DIR Series) Circular No.50 Export of Goods and Services- Realization and Repatriation of Export Proceeds-Liberalization June 3, 2008 74 A.P (

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ccount Transactions – Liberalization May 13, 2010 83 A.P. (DIR Series) Circular No.57 Export of Goods and Software – Realization and Repatriation of Export proceeds – Liberalization June 29, 2010 84 A.P. (DIR Series) Circular No.03 Export of Goods and Services – Unrealized export bills – Write-off – Surrender of export incentives July 22, 2010 85 A.P. (DIR Series) Circular No.17 Processing and Settlement of Export related receipts facilitated by Online Payment Gateways November 16, 2010 86 A.P. (DIR Series) Circular No.30 ACU Mechanism – Payments for import of Oil or Gas December 23, 2010 87 A.P. (DIR Series) Circular No.31 ACU Mechanism – Indo-Iran Trade December 27, 2010 88 A.P. (DIR Series) Circular No.47 Export of Goods and Software – Realization and Repatriation of export proceeds – Liberalization March 31, 2011 89 A.P. (DIR Series) Circular No.15 Exchange Earners Foreign Currency (EEFC) Account and Resident Foreign Currency (RFC) account – Joint holder – liberalization September

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– Receipt of advance payment for export of goods Involving shipment (manufacture and ship) beyond one year February 21, 2012 98 A.P. (DIR Series) Circular No.84 Compilation of R-Returns : Reporting under FETERS February 29, 2012 99 A.P. (DIR Series) Circular No.92 Opening of Diamond Dollar Accounts (DDAs) – Change in periodicity of the reporting March 13, 2012 100 A.P. (DIR Series) Circular No.98 Discontinuation of Supplying Printed GR forms by Reserve Bank March 30, 2012 101 A.P. (DIR Series) Circular No.124 Exchange Earner's Foreign Currency (EEFC) Account May 10, 2012 102 A.P. (DIR Series) Circular No.128 Exchange Earner s Foreign Currency Account May 16, 2012 103 A.P. (DIR Series) Circular No.08 Exchange Earner's Foreign Currency Account July 18, 2012 104 A.P. (DIR Series) Circular No.12 EEFC Account, Diamond Dollar Account and Resident Foreign Currency Account – Review of Guidelines July 31, 2012 105 A.P. (DIR Series) Circular No.46 Supply of Goods and Services by Special

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Export of Goods and Services – Realization and Repatriation period for units in Special Economic Zones (SEZ) June 13, 2013 113 A.P. (DIR Series) Circular No.109 Processing and Settlement of Export related receipts facilitated by Online Payment Gateways – Enhancement of the value of transaction June 13, 2013 114 A.P. (DIR Series) Circular No.118 Export of Goods and Services – Project Exports June 26, 2013 115 A.P. (DIR Series) Circular No.14 Export of Goods and Software – Realization and Repatriation of export proceeds – Liberalization July 22, 2013 116 A.P. (DIR Series) Circular No.43 Export of Goods and Services – Simplification and Revision of Declaration Form for Exports of Goods/Software September 13, 2013 117 A.P. (DIR Series) Circular No.51 Export of Goods and Services – Project Exports September 20, 2013 118 A.P. (DIR Series) Circular No.60 Export Outstanding Statement (XOS) Online Bank wide Submission October 01, 2013 119 A.P. (DIR Series) Circular No.62 Closing of Old Outstand

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Project Exports July 22, 2014 128 A.P. (DIR Series) Circular No.15 Compilation of R-return : Reporting under FETERS – Discontinuation of ENC and Sch 3 to 6 File July 28, 2014 129 A.P.(DIR Series) Circular No. 37 Export of Goods / Software / Services – Period of Realization and Repatriation of Export Proceeds – For exporters including Units in SEZs, Status Holder Exporters, EOUs, Units in EHTPs, STPs and BTPs November 20, 2014 130 A.P.(DIR Series) Circular No. 74 Delay in Utilization of Advance Received for Exports February 9, 2015 131 A.P. (DIR Series) Circular No.93 Export of Goods and Services – Project Exports April 1, 2015 132 A.P.(DIR Series) Circular No. 101 Export of Goods and Services – Declaration of Exports of Goods / Software May 14 , 2015 133 A.P.(DIR Series) Circular No. 1 Re-export of unsold rough diamonds from Special Notified Zone of Customs without Export Declaration Form (EDF) formality July 02, 2015 134 A.P.(DIR Series) Circular No. 5 Export factoring on non-recourse

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FEMA – 13/2015-16 – Dated:- 1-7-2015 – RBI/2015-16/82 Master Circular No. 13/2015-16 July 01, 2015 To, All Category – I Authorised Dealer Banks Madam / Sir, Master Circular on Import of Goods and Services Import of Goods and Services into India is being allowed in terms of Section 5 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. G.S.R. 381(E) dated May 3, 2000 viz. Foreign Exchange Management (Current Account Transaction) Rules, 2000 as amended from time to time. 2. This Master Circular consolidates the existing instructions on the subject of "Import of Goods and Services" at one place. The list of underlying circulars consolidated in this Master Circular is furnished in Appendix. 3. This Master Circular is being updated from time to time as and when the fresh instructions are issued. The date up to which the Master Circular has been updated is suitably indicated. 4. This Master Circular may be referred to for general guidance. The Autho

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and Preservation C.10. Follow up for Import Evidence C.11. Issue of Bank Guarantee C.12. Import of Gold C.13. Import of Other Precious Metals C.14. Import Factoring C.15. Merchanting Trade C.16. Import Payments through Online Payment Gateway Service Providers Annex-1 Annex-2 Annex -3 Appendix Consolidated List of Circulars in the Master Circular Section I – Introduction (i) Import trade is regulated by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry, Department of Commerce, Government of India. Authorised Dealer Category – I (AD Category – I) banks should ensure that the imports into India are in conformity with the Foreign Trade Policy in force and Foreign Exchange Management (Current Account Transactions) Rules, 2000 framed by the Government of India vide Notification No. G.S.R.381 (E) dated May 3, 2000 and the Directions issued by Reserve Bank under Foreign Exchange Management Act, 1999 from time to time. (ii) AD Category – I banks shoul

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nd regulations to be followed by the AD Category – I banks from the foreign exchange angle while undertaking import payment transactions on behalf of their clients are set out in the following paragraphs. Where specific regulations do not exist, AD Category – I banks may be governed by normal trade practices. AD Category – I banks may particularly note to adhere to "Know Your Customer" (KYC) guidelines issued by Reserve Bank (Department of Banking Regulation) in all their dealings. B.2. Remittances for Import Payments AD Category I Banks may allow remittance for making payments for imports into India, the after ensuring that all the requisite details are made available by the importer and the remittance is for bona fide trade transactions as per applicable laws in force. B.3. Import Licences Except for goods included in the negative list which require licence under the Foreign Trade Policy in force, AD Category – I banks may freely open letters of credit and allow remittances

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importer furnishes evidence of import viz., Exchange Control Copy of the Bill of Entry, Postal Appraisal Form or Customs Assessment Certificate, etc., and satisfy himself that goods equivalent to the value of remittance have been imported. (iii) In addition to the permitted methods of payment for imports laid down in Notification No.FEMA14/2000-RB dated 3rd May 2000, payment for import can also be made by way of credit to non-resident account of the overseas exporter maintained with a bank in India. In such cases also AD Category – I banks should ensure compliance with the instructions contained in sub-paragraphs (i) and (ii) above. B.5. Time Limit for Settlement of Import Payments B.5.1. Time limit for Normal Imports (i) In terms of the extant regulations, remittances against imports should be completed not later than six months from the date of shipment, except in cases where amounts are withheld towards guarantee of performance, etc. (ii) AD Category – I banks may permit settlement

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special permission of the Reserve Bank, import or bring into India, any foreign currency. Import of foreign currency, including cheques, is governed by clause (g) of sub-section (3) of Section 6 of the Foreign Exchange Management Act, 1999, and the Foreign Exchange Management (Export and Import of Currency) Regulations 2000, issued by Reserve Bank vide Notification No.FEMA 6/2000-RB dated May 3, 2000, as amended from time to time. (ii) Reserve Bank may allow a person to bring into India currency notes of Government of India and / or of Reserve Bank subject to such terms and conditions as the Reserve Bank may stipulate. B.6.1. Import of Foreign Exchange into India A person may- (i) Send into India, without limit, foreign exchange in any form other than currency notes, bank notes and travellers cheques; (ii) Bring into India from any place outside India, without limit, foreign exchange (other than unissued notes), subject to the condition that such person makes, on arrival in India, a d

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ly). (ii) A person may bring into India from Nepal or Bhutan, currency notes of Government of India and Reserve Bank of India for any amount in denominations up to ₹ 100/-. B.7. Third Party Payment for Import Transactions AD category I banks are allowed to make payments to a third party for import of goods, subject to conditions as under: Firm irrevocable purchase order / tripartite agreement should be in place. However this requirement may not be insisted upon in case where documentary evidence for circumstances leading to third party payments / name of the third party being mentioned in the irrevocable order / invoice has been produced. AD bank should be satisfied with the bonafides of the transactions and should consider the Financial Action Task Force (FATF) Statement before handling the transactions; The Invoice should contain a narration that the related payment has to be made to the (named) third party; Bill of Entry should mention the name of the shipper as also the narra

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nt/s) is unable to obtain bank guarantee from overseas suppliers and the AD Category – I bank is satisfied about the track record and bonafides of the importer, the requirement of the bank guarantee / standby Letter of Credit may not be insisted upon for advance remittances up to USD 5,000,000 (US Dollar five million). AD Category – I banks may frame their own internal guidelines to deal with such cases as per a suitable policy framed by the bank's Board of Directors. (c) A Public Sector Company or a Department/Undertaking of the Government of India / State Government/s which is not in a position to obtain a guarantee from an international bank of repute against an advance payment, is required to obtain a specific waiver for the bank guarantee from the Ministry of Finance, Government of India before making advance remittance exceeding USD 100,000. (ii) All payments towards advance remittance for imports shall be subject to the specified conditions. C.1.2. Advance Remittance for Imp

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not permitted for import of conflict diamonds (Kimberly Certification). vi. KYC and due diligence exercise should be done by the AD Category – I banks as per the existing guidelines. vii. AD Category – I banks should follow-up submission of the Bill of Entry / documents evidencing import of rough diamonds into the country by the importer, in terms of the Act / Rules / Regulations / Directions issued in this regard. b) In case of an importer entity in the Public Sector or a Department / Undertaking of the Government of India / State Government/s, AD Category – I banks may permit the advance remittance subject to the above conditions and a specific waiver of bank guarantee from the Ministry of Finance, Government of India, where the advance payments is equivalent to or exceeds USD 100,000/- (USD one hundred thousand only). C.1.3. Advance Remittance for Import of Aircrafts/Helicopters and other Aviation Related Purchases 1. As a sector specific measure, airline companies which have been

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entity and the overseas manufacturer company as well. ii. Advance payments should be made strictly as per the terms of the sale contract and directly to the account of the manufacturer (supplier) concerned. iii. AD Category – I banks may frame their own internal guidelines to deal with such cases, with the approval of their Board of Directors. iv. In the case of a Public Sector Company or a Department / Undertaking of Central /State Governments, the AD Category – I bank shall ensure that the requirement of bank guarantee has been specifically waived by the Ministry of Finance, Government of India for advance remittances exceeding USD 100,000. v. Physical import of goods into India is made within six months (three years in case of capital goods) from the date of remittance and the importer gives an undertaking to furnish documentary evidence of import within fifteen days from the close of the relevant period. It is clarified that where advance is paid as milestone payments, the date of

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itions: (a) Where the amount of advance exceeds USD 500,000 or its equivalent, a guarantee from a bank of international repute situated outside India, or a guarantee from an AD Category – I bank in India, if such a guarantee is issued against the counter-guarantee of a bank of international repute situated outside India, should be obtained from the overseas beneficiary. (b) In the case of a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments, approval from the Ministry of Finance, Government of India for advance remittance for import of services without bank guarantee for an amount exceeding USD 100,000 (USD One hundred thousand) or its equivalent would be required. (c) AD Category – I banks should also follow-up to ensure that the beneficiary of the advance remittance fulfils his obligation under the contract or agreement with the remitter in India, failing which, the amount should be repatriated to India. C.2. Interest on Import Bills (i)

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riginal goods which have been lost, the original endorsement to the extent of the value of the lost goods may be cancelled by the AD Category – I bank and fresh remittance for replacement imports may be permitted without reference to Reserve Bank, provided, the insurance claim relating to the lost goods has been settled in favour of the importer. It may be ensured that the consignment being replaced is shipped within the validity period of the license. C.4. Guarantee for Replacement Import In case replacement goods for defective import are being sent by the overseas supplier before the defective goods imported earlier are reshipped out of India, AD Category-I banks may issue guarantees at the request of importer client for dispatch/return of the defective goods, according to their commercial judgment. C.5. Import of Equipment by Business Process Outsourcing (BPO) Companies for their Overseas Sites AD Category – I bank may allow BPO companies in India to make remittances towards the cos

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m overseas suppliers Import bills and documents should be received from the banker of the supplier by the banker of the importer in India. AD Category – I bank should not, therefore, make remittances where import bills have been received directly by the importers from the overseas supplier, except in the following cases: (i) Where the value of import bill does not exceed USD 300,000. (ii) Import bills received by wholly-owned Indian subsidiaries of foreign companies from their principals. (iii) Import bills received by Status Holder Exporters as defined in the Foreign Trade Policy, 100% Export Oriented Units / Units in Special Economic Zones, Public Sector Undertakings and Limited Companies. (iv) Import bills received by all limited companies viz. public limited, deemed public limited and private limited companies. C.6.1.2. Receipt of import documents by the importer directly from overseas suppliers in case of specified sectors As a sector specific measure, AD Category – I banks are pe

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cord of the importer customer. Before extending the facility, they should also obtain a report on each individual overseas supplier from the overseas banker or reputed overseas credit rating agency. C.6.1.3. Receipt of import documents by the AD Category – I bank directly from overseas suppliers (i) At the request of importer clients, AD Category – I bank may receive bills directly from the overseas supplier as above, provided the AD Category – I bank is fully satisfied about the financial standing/status and track record of the importer customer. (ii) Before extending the facility, the AD Category – I bank should obtain a report on each individual overseas supplier from the overseas banker or a reputed overseas credit agency. However, such credit report on the overseas supplier need not be obtained in cases where the invoice value does not exceed USD 300,000 provided the AD Category – I bank is satisfied about the bonafides of the transaction and track record of the importer constitue

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entary evidence due to genuine reasons such as non- arrival of consignment, delay in delivery/ customs clearance of consignment, etc., AD bank may, if satisfied with the genuineness of request, allow reasonable time, not exceeding three months from the date of remittance, to the importer to submit the evidence of import. C.7.2. Evidence of Import in Lieu of Bill of Entry (i) AD Category – I bank may accept, in lieu of Exchange Control Copy of Bill of Entry for home consumption, a certificate from the Chief Executive Officer (CEO) or auditor of the company that the goods for which remittance was made have actually been imported into India provided :- (a) The amount of foreign exchange remitted is less than USD 1,000,000 or its equivalent and (b) The importer is a company listed on a stock exchange in India and whose net worth is not less than ₹ 100 crore as on the date of its last audited balance sheet, or, the importer is a public sector company or an undertaking of the Governmen

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ange Control Copy of the Bill of Entry, Postal Appraisal Form, or Customs Assessment Certificate, etc., from importers by issuing acknowledgement slips containing all relevant particulars relating to the import transactions. C.9. Verification and Preservation (i) Internal inspectors or auditors (including external auditors appointed by AD Category – I bank) should carry out verification of the documents evidencing import, e.g. Exchange Control copies of Bills of Entry or Postal Appraisal Forms, or Customs Assessment Certificates, etc. (ii) Documents evidencing import into India should be preserved by AD Category – I bank for a period of one year from the date of their verification. However, in respect of cases which are under investigation by investigating agencies, the documents may be destroyed only after obtaining clearance from the investigating agency concerned. C.10. Follow-up for Import Evidence (i) In case an importer does not furnish any documentary evidence of import, as requ

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e of import involving amount of USD 100,000 or less provided they are satisfied about the genuineness of the transaction and the bonafides of the remitter. A suitable policy may be framed by the bank's Board of Directors and AD Category – I bank may set their own internal guidelines to deal with such cases. C.11. Issue of Bank Guarantee AD Category – I banks are permitted to issue guarantee on behalf of their importer customers in terms of Notification No. FEMA 8/2000-RB dated May 3, 2000, as amended from time to time. C.12 Import of Gold C.12.1 Import of Gold. The 20:80 scheme of import of gold was withdrawn on November 28, 2014. However, the obligation to export under the 20:80 scheme would apply to the unutilised gold imported before November 28, 2014. Nominated banks and nominated agencies, as notified by DGFT, are permitted to import gold on consignment basis. All sale of gold domestically will, however, be against upfront payment. Nominated banks are free to grant gold metal

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nancial YearBoth the statements shall be submitted, even if there is 'Nil' position, by the 10th of the following month / half year, to which it relates. C.12.2. Import of Gold Jewellery Including Jewellery Made of Precious Metals or/and Studded With Diamonds / Precious Stones /Semi-precious. Suppliers and Buyers credit (trade credit) including the usance period of Letters of Credit opened for import of gold in any form, including jewellery made of gold/precious metals or/and studded with diamonds/semi- precious/precious stones, should not exceed 90 days from the date of shipment. C.13. Import of Other Precious Metals C.13.1. Import of Platinum /Palladium/Rhodium/ Silver/Rough, Cut & Polished Diamonds / Precious and Semi-precious Stones. (a) Suppliers and Buyers Credit, including the usance period of Letters of Credit opened for import of Platinum, Palladium, Rhodium and Silver and rough, cut and polished Diamonds, Precious and semi-precious stones; should not exceed 90 day

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import of platinum and silver, on outright purchase basis subject to the condition that although ownership of the same shall be passed on to the importers at the time of import itself, the price shall be fixed later as and when the importer sells to the user. C.14. Import Factoring (i) AD Category – I bank may enter into arrangements with international factoring companies of repute, preferably members of Factors Chain International, without the approval of Reserve Bank. (ii) They will have to ensure compliance with the extant foreign exchange directions relating to imports, Foreign Trade Policy in force and any other guidelines/directives issued by Reserve Bank in this regard. C.15. Merchanting Trade C.15.1. For a trade to be classified as Merchanting Trade following conditions should be satisfied: a. Goods acquired should not enter the Domestic Tariff Area and b. The state of the goods should not undergo any transformation. C.15.2. AD Category – I bank may handle bonafide Merchanting

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he date of shipment / export leg receipt or import leg payment, whichever is first. The completion date would be the date of shipment / export leg receipt or import leg payment, whichever is the last; (e) Short-term credit either by way of suppliers' credit or buyers' credit will be available for Merchanting Trade Transactions, to the extent not backed by advance remittance for the export leg, including the discounting of export leg LC by an AD bank, as in the case of import transactions ; (f) In case advance against the export leg is received by the Merchanting Trader, AD bank should ensure that the same is earmarked for making payment for the respective import leg. However, AD bank may allow short-term deployment of such funds for the intervening period in an interest bearing account; (g) Merchanting Traders may be allowed to make advance payment for the import leg on demand made by the overseas seller. In case where inward remittance from the overseas buyer is not received b

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from the close of each half year, i.e. June and December. (k) Defaulting Merchanting Traders, whose outstandings reach 5% of their annual export earnings, would be caution-listed. (l) The KYC and AML guidelines should be observed by the AD bank while handling such transactions. Merchanting Traders have to be genuine traders of goods and not mere financial intermediaries. Confirmed orders have to be received by them from the overseas buyers. AD banks should satisfy themselves about the capabilities of the Merchanting Trader to perform the obligations under the order. The overall Merchanting Trade should result in reasonable profits to the Merchanting Trader. C.15.3. Merchanting trade to Nepal and Bhutan As Nepal and Bhutan are landlocked countries, there is a facility of transit trade whereby goods are imported from third countries by Nepal and Bhutan through India under the cover of Customs Transit Declarations in terms of the Government of India Treaty of Transit with these two countr

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e and airway bill from the OPGSP containing the name and address of the beneficiary as evidence of import and report the transaction in R-Return under the foreign currency payment head. (c) The permitted credits in the OPGSP Import Collection account will be: collection from Indian importers for online purchases from overseas exporters electronically through credit card, debit card and net banking and charge back from the overseas exporters. (d) The permitted debits in the OPGSP Import Collection account will be: payment to overseas exporters in permitted foreign currency; payment to Indian importers for returns and refunds; payment of commission at rates/frequencies as defined under the contract to the current account of the OPGSP; and bank charges Appendix Consolidated List of Circulars on Import of Goods and Services Sr. No Circular No Subject Date of Circular 1 AP(DIR Series) Circular No. 106 Import of goods and services into India. June 19, 2003 2 AP(DIR Series) Circular No. 4 Mer

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12, 2005 11 AP(DIR Series) Circular No. 33 Liberalisation of Export and Import procedures February 28, 2007 12 AP(DIR Series) Circular No. 34 Import of Goods of Value USD 100,000 and Less -Clarification on Follow up for Evidence of Import March 2, 2007 13 AP(DIR Series) Circular No. 63 Import of Equipments by BPO Companies in India for International Call Centre May 25, 2007 14 AP(DIR Series) Circular No. 77 Advance Remittance for Import of aircrafts / helicopters / other aviation related purchases June 29, 2007 15 AP(DIR Series) Circular No. 18 Direct Receipt of Import Bills / Documents – Liberalisation November 7, 2007 16 AP(DIR Series) Circular No. 37 Direct Receipt of Import Bills / Documents for Import of Rough Precious & Semi-Precious Stones April 16, 2008 17 AP(DIR Series) Circular No. 03 Advance Remittance for Import of Rough Diamonds August 4, 2008 18 AP(DIR Series) Circular No. 08 Advance Remittance for Import of Rough Diamonds August 21, 2008 19 AP(DIR Series) Circular No

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ing of Stand – By Letter of Credit February 27, 2012 28 AP(DIR Series) Circular No. 103 Data on import of Gold – Statements – Modification April 03, 2012 29 AP(DIR Series) Circular No.83 Import of precious and semi precious stones- Clarification February 20, 2013 30 AP(DIR Series) Circular No.103 Import of Gold by Nominated Banks/Agencies May 13, 2013 31 AP(DIR Series) Circular No.107 Import of Gold by Nominated Banks/Agencies June 4, 2013 32 AP(DIR Series) Circular No. 122 Import of Gold by Nominated Banks/Agencies June 27, 2013 33 AP(DIR Series) Circular No.15 Import of Gold by Nominated Banks /Agencies/Entities July 22, 2013 34 AP(DIR Series) Circular No.39 Export import of Currency September 6, 2013 35 AP(DIR Series) Circular No.70 Third party payments for export / import transactions November 8 , 2013 36 AP(DIR Series) Circular No.71 Advance Remittance for Import of Rough Diamonds November 8, 2013 37 AP(DIR Series) Circular No.73 Import of Gold by Nominated Banks /Agencies/Entitie

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rt of Gold by Nominated Banks / Agencies / Entities May 21, 2014 47 AP(DIR Series) Circular No.146 Export & Import of Currency- Enhanced Facilities June 19, 2014 48 AP(DIR Series) Circular No. 2 Import of Rough, Cut and Polished Diamonds – credit relaxation July 07, 2014 49 A. P. (DIR Series) Circular No.42 Import of Gold by Nominated Banks/Agencies November 28, 2014 50 AP(DIR Series) Circular No 76 Form A1- Payments for Imports – Discontinuance thereof February 12, 2015 51 AP(DIR Series) Circular No 79 Guidelines on Import of Gold by Nominated Banks / Agencies February 18, 2015 52 AP(DIR Series) Circular No 96 Merchanting Trade to Nepal and Bhutan April 30, 2015 53 AP(DIR Series) Circular No .16 Processing and settlement of import and export related payments facilitated by Online Payment Gateway Service Providers September 24, 2015 54 AP(DIR Series) Circular No .29 Import of Goods into India – Evidence of Import November 26, 2015 55 AP(DIR Series) Circular No .30 Advance Remittanc

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Goods and Services Tax – Started By: – SANDESH SHINDE – Dated:- 29-6-2015 Last Replied Date:- 29-6-2015 – Dear Sir, Please give us some advantges of GST for busines entities that will be different and very important from general advantages.Thanks & regards – Reply By Mahir S – The Reply = Advantages of GST :1. GST is a transparent Tax and also reduce numbers of indirect taxes. With GST implemented a business premises can show the tax applied in the sales invoice. Customer will know exactly how much tax they are paying on the product they bought or services they consumed.2. GST will not be a cost to registered retailers therefore there will be no hidden taxes and the cost of doing business will be lower. This in turn will help Export be

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GOODS AND SERVICE TAX AS PROPOSED – Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 24-6-2015 – We are going to have a dual GST model. The Center and the States both, will levy GST on supply of goods and services. On Supply of goods and services in the course of Inter-state only Center will levy and collect taxes (IGST) which will be apportioned between Centre and States based on the recommendation of GST Council. The Center will have power to make place of supply rules in this regard. On supply of goods and services in the course of or International trade or commerce, states will not have any power to levy and collect taxes. For the first two years under GST (or as GST Council would recommend), 1% additional tax apart from GST will be levied on inter-state sale of goods which will be assigned to the state of origin of supply of goods. The rules regarding the place of origin will be formed by the Parliament. The Central Government would also have power to grant exempti

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ernment may appoint by way of notification, after enactment. For enactment, it has to be passed by two-third majority by both houses of the Parliament of those present and simple majority of total membership of both houses. It has to be then approved by one-half of the state Governments, i.e. atleast 15 states. The said Bill has been passed Lok Sabha on 06.05.2015 but could not be passed by Rajya Sabha. The same has now been referred to the Select Committee of the Rajya Sabha. For GST network, a special purpose company has been incorporated to implement IT back bone of proposed GST. It will provide IT infrastructure and services to various stakeholders including the Union and State Government. It has been set as an as section 25 (not for profit) company under the Companies Act, 1956, non-government private limited company in which Government will retain strategic control. The Government seems to Committed to ushering in GST w.e.f. April 2016. GST network planned as back-bone in terms o

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ts, etc. A very strong infrastructure network would be required to administer GST which would include facility for online payment of tax and e-filing of returns. The GST as a new levy could be a very effective tool and break-through in indirect tax reforms, provided it is made simple and assessee-friendly – not like the present tax system. Not only GST is expected to change the complexion of indirect taxation in India, it will also bring down the prices of goods and services across the board. The consensus among the states (29) and between the Centre and states hold the key. Once consensus is reached, GST may see the light of the day in a year s time, even during any time of the year, it being a transaction based tax. While there is no doubt that GST will come, the sooner the better, it should also address the problems in present day taxation i.e., it should seek to achieve rationalization, boost transparency, offer flexibility to Union and states and broaden the much needed tax base.

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Dated:- 17-6-2015 – Finance Minister has approved the formation of 2 Committees for facilitating implementation of Goods and Services Tax from 1.4.2016. A Steering Committee been formed under the Co-Chairmanship of Additional Secretary, Department of Revenue and Member Secretary, Empowered Committee of State Finance Ministers. This Committee has Members from Department of Revenue, Central Board of Excise & Customs, Goods and Services Tax Network (GSTN) and representatives of State Governments. This Committee shall monitor the progress of IT preparedness of GSTN/CBEC/Tax authorities, finalisation of reports of all the Sub-Committees constituted on different aspects relating to the mechanics of GST and drafting of CGST, IGST and SGST law

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erway to finalise various aspects of GST design like business processes, payment systems, matters relating to dual control, threshold, exemptions, place of supply rules and also making of model GST, SGST and IGST laws and rules. This task is being undertaken through various Sub-Committees formed by the Empowered Committee which has officers from Government of India as well as State Governments as Members. Goods and Services Tax Network (GSTN) is taking steps for preparing the IT infrastructure for roll out of GST. The IT infrastructure shall enable online registration, filing of returns and getting refunds. Various State Governments are also preparing the necessary back end IT infrastructure for implementation of GST which shall relate to a

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