Goods and Services Tax

2015 (3) TMI 1025 – ITAT MUMBAI – [2014] 29 ITR (Trib) 362 (ITAT [Mum]) – – Transfer pricing adjustment – assessee has challenged the addition on account of transfer pricing adjustment in respect of sale made to the associated enterprise by applying comparable uncontrolled price method instead of transactional net margin method – Held that:- Under a particular description, invoices raised to associated enterprise and non-associated enterprise were similar. Exact difference in invoices have not been brought forth before us. Thus in the case of the assessee, there was availability of the internal comparable uncontrolled price, wherein on similar nature of transaction and similar description of product as given in the invoices, the assessee has been charging prices from the associated enterprise as well as from the third party. Even though there may be some differences of size, carat, weight and other aspects, however the same has not been clearly demarcated or demonstrated by the asses

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the assessee to one M/s. Simona NV. Now it has been brought on the record before the Commissioner of Income-tax (Appeals), which has also been a subject matter of remand before the Transfer Pricing Officer that the said transactions have been cancelled, as the said party has returned back/diverted the diamonds sold to them to the assessee's associated enterprise. This is evident from the letter dated October 14, 2010, written by Simona NV. Thus as from the above letter and relevant finding of the Commissioner of Income-tax (Appeals), it is quite conclusive that, the said party has not purchased the diamonds sent on these two invoices and ultimately, it has been sold to associated enterprise only. Thus, such a transaction cannot be considered for benchmarking and determining the arm's length price. Once the particular transaction, which is the subject matter of comparison for transfer pricing adjustment, has not even undertaken or has been cancelled, then such a transaction has to be e

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is always a chance of negotiation of preferable price by the purchaser and there is difference in the price as compared to the one where very small quantity of sale or purchase takes place. Such difference of volume, definitely has a bearing on the negotiation of the prices and, therefore, adjustment on this factor has to be made. This itself is a material difference. We, also agree with the contention of the assessee that marketing expenses in the case of the associated enterprise are comparatively less as there is quite probability of the transaction being finalised. There is also an element of bad debt risk involved in the case of a third party which is much less probable in the case of the related party. If all these differences, which in our opinion are quite “material differences” are taken into account and adjustment is made then difference of rate, which here in this case is approximately 11 per cent., can be made. Thus, looking to these factors of material difference includin

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omparison to non-associated enterprises – CIT(A) deleted the addition – Held that:- The average days of delay in payment as worked out by the Transfer Pricing Officer is also inappropriate as number of sale transactions with associated enterprise is far more than the non-associated enterprise and will result in improper working of average days. On these facts of the case, we do not find any reason for making any kind of upward adjustment on account of differences in period for realisation of payments in respect of sales made to associated enterprise as well as non-associated enterprises. Such a notional interest cannot be charged for the purpose of making adjustment in the arm's length price. Thus the order of the Commissioner of Income-tax (Appeals) deleting the adjustment of Rs, 4,65,23,007 on this score is upheld – Decided in favour of assessee. – ITA NO. 7303/Mum/2011, ITA NO. 7460/Mum/2011 Dated:- 23-10-2013 – SHRI P.M. JAGTAP AND SHRI AMIT SHUKLA, JJ. For the Appellant : Shri Vi

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to be charged on delayed payment on sales/invoices which are receivables from the associated enterprise. Since common issue of transfer pricing adjustment is involved in both the appeals, therefore, they are being disposed of by this consolidated order for the sake of convenience. 2. The facts in brief, are that the assessee which is a partnership firm, is engaged in the business of manufacture of cut and polished diamonds and selling them to associated enterprise as well as to the third parties. In the transfer pricing report in Form 3CEB, the assessee has disclosed the following international transaction with its associate enterprises (AEs) : Sl. No. Class of transactions in the financial year 2006-07 Amount Method used 1. Purchase of rough diamonds 10,88,53,365 Transactional net margin method 2. Sale of cut and polished diamonds 1,26,34,59,644 Transactional net margin method For benchmarking the transactions with its associated enterprise, the assessee has adopted the transactional

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ise. The list of such invoices has been illustrated at page 2 of the Transfer Pricing Officer's order. From details of such transactions, he noticed that there are differences in prices which were charged from associated enterprise and from the third parties. Accordingly, he deduced that the prices charged from the non-associated enterprise can be used as comparable for benchmarking the price charged by the assessee from its associated enterprises, by applying internal comparable uncontrolled price. On this aspect, the Transfer Pricing Officer required the assessee to show cause, as to why the difference in the rates paid to the associated enterprise in comparison to non-associated enterprise should not be considered as additional price to be charged from the associated enterprise on sales made to them and upward adjustment be made on the value of such international transaction. In response, the assessee submitted that there are various reasons for non comparability of associated e

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re was difference in price of more than 5 per cent. as the prices charged from the associated enterprises were less than the prices charged from the non-associated enterprises, accordingly he proceeded to make adjustment in respect of the said three categories of transactions. The calculation and the addition made by the Transfer Pricing Officer in respect of three categories of the diamonds were as under : Products Qty. in carats Difference/-carats (US dollar) Value of differences (US dollar) Value of difference (in Rs.) Export to the associated enterprise 25 P/CT D CUT white VS1 3250.08 82.28 270667.65 1,21,85,458 25 P/CT D CUT white VVS1 2773.20 41.11 114005.15 51,32,512 6P/CT D CUT White VVS1 201.35 69.94 14083.40 6,34,035 Total 398756.20 1,79,52,005 2.2. Accordingly the Transfer Pricing Officer made an adjustment of ₹ 1,79,52,005 to the arm's length price of the exports of diamonds to the associated enterprise. 2.3. Further while analysing the details of realisation peri

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red with the comparable companies. Further there is a less risk involved in the payment from associated enterprises and, therefore, the benefit of extended credit period is quite justified. However the Assessing Officer rejected the assessee's contention and worked out the upward adjustment of ₹ 4,65,23,007 after observing and holding as under : "The submission of the assessee has been duly considered. It is clear that the assessee is giving benefit to its associated enterprise by allowing more days of interest free credit vis-a-vis the non-associated enterprises. Thus, an adjustment is warranted on account of delayed average realisation period. Following the comparable uncontrolled price Method, because no person in uncontrolled transactions will permit use of money without interests, so as to consider the trans action to be at arm's length. The assessee was also asked to furnish the average borrowing cost of its fund. The assessee vide its submis sion dated October

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Income-tax (Appeals), on the first issue, the assessee submitted that the comparable uncontrolled price method (CUP) cannot be adopted as most appropriate method, because the prices of two diamonds cannot be same or can be compared merely on the basis that the diamonds have same description on invoices, as there are several factors which has to be taken into consideration on which diamonds are priced like quality of diamonds, size per carat, type of shape, type of colour and fluorescence, purity and various grades of diamonds. All these factors needs to be differentiated and they have affect the pricing of the diamonds, and these differences are not possible to mention in the invoices. In support of this contention, the assessee submitted Rapport report, and certificate from International Gemological Institute, to point out various sub-classifications within each category of diamond and the impact on pricing of the diamonds. The assessee has also highlighted the various instances, whe

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ere huge as compared to non-associated enterprises. Further, in case of sale to associated enterprises, the assessee does not have to incur various costs of marketing expenses and the risk factor is also less while making sales to the associated enterprises. These differences has to be taken into account while benchmarking the prices with the associated enterprises as well as with non-associated enterprises. 3.1. During the course of appellate proceedings, the assessee also filed additional evidence with regard to particular transactions in the case of Simona NV (third party), which has been benchmarked by the Transfer Pricing Officer and had made the adjustment in respect of two categories of transactions, this has resulted into adjustment of ₹ 1,28,19,493. From the said additional evidence which was in the form of letter from the said party the assessee had contended that the said non-associated enterprise had not purchased the diamonds, but had forwarded the said consignment o

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the Transfer Pricing Officer. However, the Transfer Pricing Officer on perusal of the confirmation letter and invoices, observed that this transaction was circular in nature as the sale has been diverted to the assessee's associated enterprise. The learned Commissioner of Income-tax (Appeals) accepted the said additional evidence on the ground that, the said letter was dated October 14, 2010, whereas the proceedings before the Transfer Pricing Officer had ended by that time as the order of the Transfer Pricing Officer was passed on October 18, 2010. After detail reasoning the learned Commissioner of Income-tax (Appeals) has admitted this additional evidence, because it goes to the very root of the transfer pricing adjustment. The admission of this additional evidence has also not been challenged by the Department in its appeal. 3.2. Thus after admitting this additional evidence and considering the entire material on record, this issue of transfer pricing adjustment of ₹ 1,79

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oducts. Accordingly even if such differences existed, the same at best could be treated as 'mere differences' and not the 'material differences', which would affect the price of the product in the open market, as has been envis aged in rule 10B(1)(a)(ii) of the Income-tax Rules, 1962. In view of these facts and circumstances, the objections raised by the appellant in this regard are rejected. 2. The appellant has further mentioned that diamond industry is very price sensitive and that there are various judicial precedents in the Indian context, wherein, it has been held that each diamond is unique, and hence, the prices of different diamond cannot be compared. In this regard it is stated that the appellant has not demonstrated with any facts or figures, how such a mention is relevant to the appellant's case. Further what are those judicial pronouncements which have held about the uniqueness of the diamond in the Indian context has not been submitted by the appellant

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ransfer Pricing Officer has not granted enough opportunity and time to prove that the comparable prices used by the Transfer Pricing Officer in respect of which the adjustments have been made are in fact not comparable transactions at all. In this regard it is stated that the appellant was given sufficient opportunity by the Transfer Pricing Officer. The proceedings before the Transfer Pricing Officer were initiated on March 18, 2010 and the order under section 92CA(3) was passed on October 18, 2010. During the course of the proceedings the authorised representative attended before the Transfer Pricing Officer at least for 8 times on various dates. Accordingly it cannot be arrived, at that the appellant was not given sufficient opportunity to make its submissions or it was not given sufficient or reasonable opportunity by the Transfer Pricing Officer. However it may be mentioned here that the additional evidence which the appel lant filed and seems to be considered in the instant proce

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confirmation letter and bills submitted by the assessee, it is seen that the said transactions under reference were of circular nature" it is seen that in respect of the said two categories of diamonds, Transfer Pricing Officer had used sales made to Simona N. V. vide invoice No. 187 dated March 13, 2007 and vide invoice No. 215 dated March 31, 2007 as comparable uncontrolled transaction and made adjustments accordingly. In this respect, as submitted by the appellant and also confirmed by the Transfer Pricing Officer vide his remand report dated July 20, 2011, the said sales to non-associated enterprise (Simona N.V.) were eventually sold to associated enterprise, since the non-associated enterprise found the prices to be very high. Accordingly, the said transaction cannot be regarded as comparable uncontrolled transactions ; accordingly conse quent benchmarking and hence the adjustment done by the Transfer Pricing Officer would not be valid. In view of these set of facts the conse

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s as against the sale of ₹ 126.34 crores made to associated enterprise. Further, there are also various other dffferences such as difference in credit risk, marketing expenses, etc. The appellant also stated that an appropriate adjustment would have to be made to the prices charged to non-associated enterprises to make them comparable to the prices charged to associated enterprises. The appellant also submitted the calculation of the said adjustment and contended that the prices charged to associated enterprises were at arm's length. 8. I have gone through the arguments and I do not agree with the appellant's contention. The appellant has not submitted any basis of calculation of the said discount adjustment. Further, the appellant has not brought anything on record to suggest that the associated enter prises were eligible for discount based on the quantity sold. In its submission the appellant has not been able to demonstrate that the factors of dffferences which it has

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rm's length price. Secondly, he has accepted the additional evidence in the form of letter dated October 14, 2010 of M/s. Simona NV after giving the detail reasoning and based on such letter, he came to the conclusion that no adjustment on account of such transaction can be made, as the sale itself was not undertaken and hence cannot be considered for comparable uncontrolled transaction and, therefore, adjustment on such a transaction is not valid. Accordingly sum of ₹ 1,28,19,493 based on such transaction was deleted. Lastly, on the balance transaction, wherein, the adjustment of ₹ 51,32,512 was made by the Transfer Pricing Officer has been confirmed by him. Against this, the assessee as well as the Department had come in appeal before us. 4. Learned counsel, Shri Vijay Mehta on behalf of the assessee submitted before us that first of all, no valid reason had been given by the Transfer Pricing Officer or the Commissioner of Income-tax (Appeals) for rejecting the assess

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ity, colour fluorescence, polish, etc. Such a huge dissimilarity in the products itself cannot lead to application of comparable uncontrolled price method, which requires very high degree of product similarity. He drew our attention to Rapport report and certificate of International Gemological Institute, along with the literature on shapes and sizes of the diamonds in support the contention that, there is a huge difference in the grading and pricing of the diamonds. Even in the transfer pricing study report this issue has been highlighted in detail and our specific attention was drawn to page 129 of the paper book and also on pages 39 and 40 of the paper book. Even from the perusal of the invoices, he submitted that, it can be seen that Transfer Pricing Officer has not taken piece wise or carat wise description but has gone by the pricing by the category of diamond which was sold to the associated enterprise as well as to unrelated parties. Within the same category, there is a huge va

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propriate method in the case of the assessee but also the same comparables. 5. Per contra, the learned Commissioner of Income-tax (Departmental representative), Shri Ajit Jain, submitted that, from the very perusal of the transaction as highlighted by the Transfer Pricing Officer at page 2 of his order, it can be seen that there is a clear cut description of piece per carat, the kind of cut and the description of the clarity of the diamonds. Under such description, the assessee has not only sold the diamonds to the associated enterprise but also to the third party customers and, therefore, in such a situation the negotiated price with the associated enterprise as well as with the unrelated parties has to be compared and benchmarked. This is what Transfer Pricing Officer has done after applying the comparable uncontrolled price method. In this case, there was an internal comparable uncontrolled price, therefore, there was no need to resort to transactional net margin method. Once the di

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ables has to be done because neither the Transfer Pricing Officer nor the Commissioner of Income-tax (Appeals) has carried out any comparability analysis. Some of the comparables as highlighted by the assessee are also into jewellery business, whereas the assessee is purely engaged in the business of selling of cut and polished diamonds. In any case, if transactional net margin method has to be accepted then the matter is required to be sent back to the Transfer Pricing Officer for fresh consideration. 5.1. As regards deletion/adjustment of ₹ 1,28,19,493 on account of transaction with M/s. Simona NV, learned Commissioner of Income-tax (Departmental representative) strongly relied upon the findings given by the Transfer Pricing Officer in the remand report, which has been dealt at page 7 of the appellate order and further submitted that the transaction with the said party has to be seen for the purpose of comparing the prices only and whether such transaction has actually material

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e relevant finding by the Commissioner of Income-tax (Appeals) and by the Transfer Pricing Officer and also the material referred to, before us. The assessee is mainly engaged in the manufacturing and selling of cut and polished diamonds and for this purpose it has purchased rough diamonds from associated enterprise and had also sold cut and polished diamonds to its associated enterprise. The transaction with the associated enterprise constitutes more than 66 per cent. of the entire sale. The operating margin as shown by the assessee on its sales was at 8.22 per cent. For benchmarking the arm's length price of its international transaction with its associated enterprise, the assessee has adopted transactional net margin method as the most appropriate method, after analysing various other methods and also as to why other methods cannot be applied in the case of the assessee. For comparability analysis under transactional net margin method, it has finally selected seven comparables w

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ould be the most appropriate method. 7.1. The application of the arm's length price is based on comparison of the conditions in controlled transaction with the conditions in transaction between independent enterprise, i.e., uncontrolled transaction, so as to determine the market price or the margin on which the two related parties are carrying on their transaction. The determination of the arm's length price has to be done as per the methodology prescribed under section 92C read with rule 10B. All these methods are either based on price or on profit which determine the transfer price by examining comparable matching transaction, comparable adjustable transaction and comparable profit transaction. Rule 10B(1)(a) provides that the comparable uncontrolled price method, i.e., comparable uncontrolled price, is a comparison of the prices of property or services transferred in a controlled transaction with the price charged for property or services transferred in a comparable uncontro

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tments. There can be an internal comparable uncontrolled price, when one of the group entity enters into a comparable transaction with an unrelated party where the goods or services under consideration are the same or similar. There can be an external comparable uncontrolled price also, if a transaction between two independent enterprises involves goods or services under comparable conditions. As pointed out by learned counsel, in diamond industry/business within the same product of diamond, there is a huge dissimilarity and variation of features which leads to difference in the prices. The pricing of the diamonds depends upon various parameters/factors like size of the diamond, carat weight, various types of shape, colour fluorescence, clarity, grade, polishing, height and depth angle, girdle thickness, etc., which leads to differential pricing of the diamonds. In such a condition it becomes very difficult to apply comparable uncontrolled price method in benchmarking the pricing of th

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amond. Under this description, invoices has been raised not only to the associated enterprise but also to the third party customers. If on the similar nature of transaction and description of goods the prices have been negotiated by two parties, one in controlled situation and another in uncontrolled transaction, then such a pricing can be examined for the purpose of benchmarking the price which had been charged by the assessee unless it is shown that within such invoices there were different kinds of diamonds under sale transaction. Though we have already held that in the sale of diamonds, it is very difficult to benchmark the price by applying the comparable uncontrolled price method, however on the peculiar facts of the present case, it is seen that in the nature of sale transaction undertaken by the assessee and the price which has been charged from the associated enterprise appears to be on similar description of diamonds which has been sold to the third party also. The nature and

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114005.15 5 100 P/CT D CUT White SI 1599.92 360.53 63.84 370.01 9.47 5683.98 6 100 P CT D CUT White VVS1 144.49 481.71 16.04 485.00 3.29 475.70 7 10 P/CT D CUT White VVS2 485.47 648.66 70.32 673.73 25.07 12169.22 8* 6P/ CT D CUT White VVS1 201.35 847.02 2.37 916.96 69.94 14083.40 9 6P/CT D CUT White VVS2 100.89 793.15 14.38 823.79 30.64 3091.22 10 6P/CT D CUT White VS2 42.84 635.00 43.43 662.17 27.17 1164.17 11 10P/CT D CUT White VVS1 431.09 715.57 9.89 720.70 5.13 2213.19 * Subject matter of transfer pricing adjustment. 7.3. Out of all these transactions, nine transactions have been accepted by the Transfer Pricing Officer, as the price difference was less than 5 per cent. and it was only with regard to three transactions, which have been given at serial Nos. 2, 4 and 8, the Transfer Pricing Officer has drawn the adverse inference on the basis of major difference in prices charged by the assessee. From the above details, it appears that under a particular description, invoices raised

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(Appeals) that there was internal comparable uncontrolled price available in the case of the assessee for determining the transfer price. Once a direct method of internal comparable uncontrolled price is available then there is no need to resort to transactional net margin method. 7.4. Now coming to the deletion of addition of ₹ 1,28,19,493 by the Commissioner of Income-tax (Appeals), which is subject matter of ground Nos. 1, 2 and 3 in the Department's appeal. Out of the three transactions, which has been adversely viewed by the Transfer Pricing Officer, two transactions pertained to sale made by the assessee to one M/s. Simona NV. Now it has been brought on the record before the Commissioner of Income-tax (Appeals), which has also been a subject matter of remand before the Transfer Pricing Officer that the said transactions have been cancelled, as the said party has returned back/diverted the diamonds sold to them to the assessee's associated enterprise. This is evident

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arats for US$ 353,490.41)." The said letter has been subject to remand before the Transfer Pricing Officer, who has given his remark, which has been incorporated and dealt with by the Commissioner of Income-tax (Appeals) also as discussed herein the foregoing paragraphs, from the above letter and relevant finding of the Commissioner of Income-tax (Appeals), it is quite conclusive that, the said party has not purchased the diamonds sent on these two invoices and ultimately, it has been sold to associated enterprise only. Thus, such a transaction cannot be considered for benchmarking and determining the arm's length price. Once the particular transaction, which is the subject matter of comparison for transfer pricing adjustment, has not even undertaken or has been cancelled, then such a transaction has to be excluded for the purpose of benchmarking the transfer price. The detail reasoning and the conclusion given by the Commissioner of Income-tax (Appeals) as have been reproduce

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me which should be taken into consideration while examining the price differences and accordingly the adjustment should be made. Besides this, it was also submitted that price differences in diamond business are also on account of price fluctuation and differential time period. Further, in case of third party there is always a risk of bad debt which is not there in the case of the associated enterprise and also the marketing expenses in the case of the associated enterprise is less. If these differences are taken into consideration and accordingly adjustment is made, then there is no requirement for making any upward adjustment of the arm's length price. The learned Commissioner of Income-tax (Appeals) has rejected this contention, mainly on the ground that the assessee could not brought anything on the record that associated enterprises were eligible for discount, based on quantity sold and these differences are not material difference. We are of the opinion that such a reasoning

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c. All these factors have to be taken into account for determination of the price in a given transaction. In this particular transaction, the assessee has sold a total quantity of 2773.20 to its associated enterprise with an average rate of 328.89 dollars, whereas to the third party, the assessee has merely sold quantity of 8.50 carats with the rate of 370 dollars. Thus there is a huge difference in volume of sale and it is quite a normal phenomena that if the purchases and sales are made in huge quantity then there is always a chance of negotiation of preferable price by the purchaser and there is difference in the price as compared to the one where very small quantity of sale or purchase takes place. Such difference of volume, definitely has a bearing on the negotiation of the prices and, therefore, adjustment on this factor has to be made. This itself is a material difference. We, also agree with the contention of the assessee that marketing expenses in the case of the associated en

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well as from the third party and if such an adjustment is carried out then there is no requirement for making any kind of upward adjustment in this case. Therefore, the decision of the Commissioner of Income-tax (Appeals) in confirming the adjustment of ₹ 51,32,512 to the arm's length price is reversed and the said addition is deleted. Accordingly, the ground raised by the assessee is treated as allowed, whereas ground Nos. 1, 2 and 3 as raised by the Revenue stands dismissed. 9. The other issue involved in the Departmental appeal is with regard to the transfer pricing adjustment of ₹ 4,65,23,007 on account of notional interest on delayed collection of payment on sale invoices from associated enterprises in comparison to non-associated enterprises. The Transfer Pricing Officer has made this adjustment only on the ground of average days of realisation in respect of sales to associated enterprise which was 210 days, whereas in respect of non-associated enterprises the av

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ch delayed payments. In support of this, a certificate/letter from Gem and Jewellery Export Promotion Council was filed before the Commissioner of Income- tax (Appeals). Besides this various judicial precedents were also cited which has been dealt by the Commissioner of Income-tax (Appeals) in pages 13 to 15 of the appellate order. The learned Commissioner of Income-tax (Appeals) duly appreciated the assessee's contention and also relying upon the various decisions of the Income-tax Appellate Tribunal, has deleted the said addition. 11. Before us, learned counsel reiterated the submissions made before the lower authorities and also relied upon the decisions of the co-ordinate bench of the Tribunal in the case of Lintas India P. Ltd. v. Asst. CIT reported in [2013] 152 TTJ (Mum) 706 and the decision of Deputy CIT v. Indo American Jewellery Ltd. reported in [2012] 50 SOT 528 (Mum), wherein similar charging of notional interest on delayed realisation of payment from associated enterpr

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. 12. We have carefully considered the rival submissions and also perused the relevant finding of the Transfer Pricing Officer as well as the Commissioner of Income-tax (Appeals) and also the material on record. It is an undisputed fact that the assessee has not charged any interest from the third party in respect of delayed payments even when the time period of realisation has exceeded more than 300 to 400 days. From the perusal of the details as submitted by learned counsel in the paperbook, it is seen that there are many instances in which more than 200 days have been exceeded in realisation of payments in case of third parties. Once on such delayed payments with third party no interest has been charged, then to work out the notional interest in case of delayed payment by the associated enterprise is also not called for. The comparison in such a case has to be made with controlled and uncontrolled transactions and once there is no such factor present in the uncontrolled transaction

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VAT and Sales Tax – Exemption from sales tax as terry towels/cotton terry knitted towels fall under the Third Schedule to the TNGST Act – titching on edges would not make any difference to deny exempt

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VAT and Sales Tax – The petitioner has established that the revised assessment proceedings issued under Section 16(1)(a) of TNGST Act is statutorily barred by limitation and therefore the writ petitio

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FEMA – 51 – Dated:- 20-9-2013 – RBI/2013-14/286 A.P. (DIR Series) Circular No. 51 September 20, 2013 To All Category – I Authorised Dealer Banks Madam / Sir, Export of Goods and Services – Project Exports Attention of Authorized Dealers (AD) is invited to A. P. (DIR Series) Circular No. 32 dated October 28, 2003 in terms of which Memorandum of Instructions on Project and Service Exports (PEM) had been revised and A. P. (DIR Series) Circular No. 118 dated June 26, 2013 in terms of which the time limit to submit form DPX 1, PEX-1 and TCS-1 was increased to 30 days of entering contract for grant of post-award approval. 2. With specific reference to Para B.7, Para B.9, Para C.5 and Para C.6 of Memorandum of Instructions on Project and Se

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FEMA – 51 – Dated:- 20-9-2013 – RBI/2013-14/286 A.P. (DIR Series) Circular No. 51 September 20, 2013 To All Category – I Authorised Dealer Banks Madam / Sir, Export of Goods and Services – Project Exports Attention of Authorized Dealers (AD) is invited to A. P. (DIR Series) Circular No. 32 dated October 28, 2003 in terms of which Memorandum of Instructions on Project and Service Exports (PEM) had been revised and A. P. (DIR Series) Circular No. 118 dated June 26, 2013 in terms of which the time limit to submit form DPX 1, PEX-1 and TCS-1 was increased to 30 days of entering contract for grant of post-award approval. 2. With specific reference to Para B.7, Para B.9, Para C.5 and Para C.6 of Memorandum of Instructions on Project and Se

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FEMA – 43 – Dated:- 13-9-2013 – RBI/2013-14/254 A.P. (DIR Series) Circular No.43 September 13, 2013 To All Authorised Dealers in Foreign Exchange Madam / Sir, Export of Goods and Services- Simplification and Revision of Declaration Form for Exports of Goods/Softwares Attention of the Authorised Dealers is invited to Regulation 6 of the Notification No.FEMA 23/2000-RB dated May 3, 2000 viz. Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, as amended by the Notification No.FEMA 36/2001-RB dated February 27, 2001 and A.P. (DIR Series) Circular No. 80 dated February 15, 2012 ,in terms of which every exporter of goods or softwares has to give declaration in one of the forms (GR/PP/SDF/SOFTEX/Bulk SOFTEX) and submit

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ose less than US$25000, in the form as applicable. 4. Reserve Bank of India will be extending the facilities to exporters for online generation of SOFTEX Form No. (Single as well as Bulk) for use in Off-Site Software exports, in addition to EDF Form No. (Present web-based process of generation of GR Form No. gets replaced) through its website www.rbi.org.in . In order to generate the above number, the applicant has to fill-in the online form (Path www.rbi.org.in → Forms → FEMA → Forms Printing EDF/SOFTEX Form No.), thereafter, the related EDF/SOFTEX Form No. would be generated for each transaction by the applicant exporter. The specimen of online form and the advice are given in Annex III. The present facility of manual allot

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Income Tax – Expenditure on development of web site with a view to disseminate information about assessee’s business activities amongst its clients is revenue expenditure even though resulting in enduring benefit. – Tri – TMI Updates – Highlights

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Goods and Service Tax – GST – By: – Bhuwan Bhatt – Dated:- 22-8-2013 Last Replied Date:- 30-12-1899 – Of late, the business fraternity of India has been obsessed with certain economic reforms that have been in the pipeline for too long now. These reforms, like The Direct Tax Code, a common tax for goods and services, and a new Companies Act are said to contain the potential to transform the entire business scenario and promote the economic prosperity of the nation. Among these, The Goods & Service Tax (GST) seems to be most promising as it aims to bring in a common tax regime for goods and services by subsuming most indirect taxes prevalent in the economy today. Needless to say, there has been so much dialogue on GST that it no longer

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and service tax regime, becoming the first country to do so. It is a quirk of fate that we struggle to have such rational framework even today, when more than 150 countries in the world already benefit from some or the other form of GST. For us, it has become yet another classic example of how political interests and red-tapism can outweigh even such imminent reforms. In 2000, Government started discussion on GST by setting up an Empowered Committee of State Finance Ministers. The committee was headed by Asim Dasgupta, (Then Finance Minister, West Bengal). It was given the task of designing the GST model and overseeing the IT back-end preparedness for its rollout. The all-encompassing GST was mooted again by finance minister P. Chidambaram

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ter the committee submits its report, the states and the Centre would together finalize the draft and bring it back to Parliament. The Constitution Amendment Bill, a prerequisite for GST, is with the law ministry for its opinion. The standing committee of finance has finalized its report on the bill and is expected to table its report in the monsoon session of Parliament beginning 5 August. The draft Bill after incorporating the recommendations and opinion of law ministry will then be circulated to the state finance ministers before it is taken to Parliament. The time when GST sees the light of the day seems to be distant. Our Prime Minister Dr. Manmohan Singh indicates that GST implementation may prolong till the next financial year when h

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Input Credit of Goods and service tax eligible for Notification 1/2011 – Service Tax – Started By: – MUNIRAJ SRINIVASAN – Dated:- 19-8-2013 Last Replied Date:- 21-8-2013 – Dear Sir, I hereby request you to solve following problem: My client has availing input credit of service tax as well as goods, but he activities are as 1. sale of Backery goods is availing exemption notification 1/2011 and 2. paying excise duty on full rate @ 12% whether is eligible to take input credit ? Department has refus

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Companies Law – Proprietor of Trademark – FENA – There can be no concern of confusion with regard to goods and services of the plaintiff outside of Class 3 – Decided in favour of the plaintiff only to

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Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 30-7-2013 Last Replied Date:- 30-12-1899 – On Goods and Service Tax (GST) front, there is now some news to cheer about. The Empowered Committee of State Finance Ministers which met for two days on 28-29 January, 2013 cleared the major hurdles in introduction of GST. However, we are not still sure as to whether it could come in 2014 or even later. Now the onus is on the Parliament to quickly clear the Constitutional Amendment Bill, 2011 which is now almost two years old. The Centre and the states crossed one major hurdle in the way of Goods & Services Tax (GST) by agreeing to a compensation formula for the Central Sales Tax (CST). Recent Developments A sub-committee of the Centre and states recommended 100 per cent compensation to states for a cut in CST from four per cent to two per cent for 2010-11, 75 per cent for 2011-12 and 50 per cent for 2012-13, respectively and as a result, Centre will now have to pay ? 34,00

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suitable budgetary provisions. Since there is no firm date on introduction of GST, states want to have clarity on CST for 2013-14 and its compensation. The Empowered Committee has broadly agreed to amendments in the Constitution. The Empowered Committee of State Finance Ministers in May, 2013 meeting agreed to have a common exempted list of over 90 goods – both for CGST and SGST under proposed GST regime. Presently there are 96 items in exempted goods category for Value Added Tax and Centre has 243 items exempted under Central Excise. Centre will, therefore, prune down these exemptions in phases. The Committee also agreed for limit of Rs. one crore and 0.5 per cent floor rate for the compounding scheme which allows a trader to pay minimum tax but not avail the tax credit. There is no agreement, yet on common threshold limit for traders to be registered as well as for dual control of traders. The sub-committee has recommended that under GST, a trader with a turnover upto ₹ 1.5 cr

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T would become a dream tax only if it is a simple and comprehensive tax leaving no room for any confusion or bottleneck leading to any inconsistency. IT Preparedness 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. GST: What Next Time to wrap up loose ends Not likely before 2014 LS elections Constitutional Amendment Bill, 2011 – Report of Standing Committee likely in Budget session, passage by winter session 2013 GST rate – band may be introduced Consensus required at Empowered Committee on GST to abolish small taxes Agreement on CST Compensation Agreement on dropping Dispute Settlement Body GST may be introduced in phases. States

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VAT and Sales Tax – Penalty u/s 22(2) of the TNGST – Having regard to the patent illegality on account of absence of jurisdiction as per the proviso as it stood during the relevant assessment year – O

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Income Tax – F. NO. 414/5/2010-IT (INV.I) – Dated:- 11-7-2013 – OFFICE MEMORANDUM DATED 11-7-2013 It has been decided with the approval of the Competent Authority to revise allocation of subjects amongst the five Branches of Investigation Division. The revised work allocation chart is enclosed herewith Annexure. ANNEXURE Revised allocation of subjects amongst the various Branches of the Investigation Division is as under: Branch Work allocation Investigation-I 1. Policy matters relating to tax evasion, including measures and suggestions for curbing evasion 2. Policy matters relating to intelligence and investigation for detection of tax evasion 3. Researchers and studies to monitor tax evasion and measures to curb tax evasion. 4. Matters relating to survey operations under Direct Tax laws. 5. Matters relating to investigation into foreign assets cases. 6. Inter-Branch and Inter-Division coordination within the CBDT 7. Inter-departmental coordination relating to investigation and enfor

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ic Labs and related software/tools/issues. 7. Order u/s 119 of the Income-tax Act, 1961 relating to above. 8. Complaints/representations, Parliament Questions, PAC, Consultative/Advisory Committee work relating to the above. Investigation-III 1. Matters relating to reward to informants including related reports. 2. Matters relating to reward to officers and staff including related reports. 3. Monitoring of DO letters and working of DsGIT(Inv.) and CCsIT(Central) and issues arising out of the same including centralization & decentralization of cases, search assessments and related reports. 4. Monitoring Internal Action Plan of DsGIT(Inv.) and CCsIT(Central). 5. Matters relating to Income-tax Settlement Commission, settlement cases and issues relating to Chapter XIX-A of the Income-tax Act, 1961 and Chapter VA of the Wealth Tax Act 1957. 6. Orders u/s, 119 of the Income-tax Act, 1961 relating to above. 7. Complaints/representations, Parliament Questions, PAC, Consultative/Advisory Co

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ng to above. 8. Complaints representations, Parliament Questions, PAC, Consultative/Advisory Committee work relating to the above. Investigation-V 1. Matters relating to coordination with Election Commission of India including monitoring of election-related expenditure, political funding. 2. Matters relating to penalties under Chapter XXI of the Income-tax Act, 1961 and corresponding penalties under other direct tax laws. 3. Matters relating to prosecution and compounding under Direct Tax law 4. Matters relating to DGIT (I & CI) including CLB, AIR and information received through FT&TR Division under automatic exchange of information. 5. Monitoring of DO letter, working and internal action plan of DGIT(I&CI) and issues arising out of the same. 6. Matters relating to security of Direct Tax establishments, including CBDT, its attached Directorates and subordinate offices. 7. Matters relating to establishment. of armed units, procurement of arms & ammunition, management of

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Income Tax – Allocation of business expenses amongst the speculation and non-speculation activities was not only necessary but inevitable – the basis of profit and volume of the business in the ratio

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FEMA – 13/2013-14 – Dated:- 1-7-2013 – RBI/2013-14/13 Master Circular No. 13/2013-14 July 01, 2013 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) 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 issued with a sunset clause of one year. This circular will stand withdrawn on July 1, 2014 and be replaced by an updated Master Circular on the subject. Yours faithfully, (C.D.Srinivasan) Chief General Manager INDEX Section A – Introduction Sect

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ough, cut & polished diamonds C.15. Import factoring C.16. Merchanting Trade Annex -1 Annex – 2 Annex-3 Annex- 4 Annex-5 Appendix List of Circulars consolidated in the Master Circular Section A – 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 should follow normal banking procedures and adhere to the provisions of Uniform Customs and Practices for Documentary Credits (UCPDC), etc. wh

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and companies for making payments, exceeding USD 5000 or its equivalent, towards imports into India must be made in Form A-1 (Annex-5) ii) It is clarified that the ADs need not obtain any document, including Form A-1, except a simple letter from the applicant containing the basic information viz., the name and the address of the applicant, name and address of the beneficiary, amount to be remitted and the purpose of remittance, as long as the exchange being purchased is for a current account transaction (and is not included in the Schedules I and II of the Foreign Exchange Management (Current Account Transactions) Rules, 2000 framed by Government of India vide Notification No. G.S.R.381 (E) dated May 3, 2000, as amended from time to time, the amount does not exceed USD 5000 or its equivalent and the payment is made by a cheque drawn on the applicant s bank account or by a Demand Draft. B.3. Import Licenses Except for goods included in the negative list which require licence under the F

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hange acquired has been utilised for import of goods into India, the AD Category – I bank should ensure that the 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

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instructions in para C.2 of Part III of this Circular. B.6. Import of Foreign exchange / Indian Rupees (i) Except as otherwise provided in the Regulations, no person shall, without the general or 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, made 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 travell

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from any place outside India (other than from Nepal and Bhutan), currency notes of Government of India and Reserve Bank notes up to an amount not exceeding Rs.7,500/- per person. (ii) A person may bring into India from Nepal or Bhutan, currency notes of Government of India and Reserve Bank notes other than notes of denominations of above Rs.100 in either case. Section C – Operational Guidelines for Imports C.1. Advance Remittance C.1.1. Advance Remittance for import of goods (i) AD Category – I bank may allow advance remittance for import of goods without any ceiling subject to the following conditions: (a) If the amount of advance remittance exceeds USD 200,000 or its equivalent, an unconditional, irrevocable standby Letter of Credit or a guarantee from an international bank of repute situated outside India or a guarantee of an AD Category – I bank in India, if such a guarantee is issued against the counter-guarantee of an international bank of repute situated outside Ind

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ce 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 Import of Rough Diamonds (i) AD Category – I bank are permitted to allow advance remittance without any limit and without bank guarantee or standby Letter of Credit, by an importer (other than a Public Sector Company or a Department / Undertaking of the Government of India / State Government/s), for import of rough diamonds into India from the under noted mining companies, viz. a) De Beers UK Ltd, b) RIO TINTO, UK, c) BHP Billiton, Australia, d) ENDIAMA, E. P. Angola, e) ALROSA, Russia, f) GOKHARAN, Russia, g) Rio Tinto, Belgium, h) BHP Billiton, Belgium and i) Namibia Diamond Trading Company (PTY) Ltd. (NDTC). (ii) While allowing the advance remittance, AD bank may ensure the following: (a) The importer should be a recognized processor of rough diamonds as per the list to be approved by Gems and Jewellery Export Promotion

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se of an importer entity in the Public Sector or a Department / Undertaking of the Government of India / State Government/s, AD Category – I bank may permit 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. (iv) AD Category – I banks are required to submit a report in the format annexed (Annex-2) of all such advance remittances made without a bank guarantee or Standby Letter of Credit, where the amount of advance payment is equivalent to or exceeds USD 5,000,000, to the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Trade Division, Central Office, Amar Building, Sir. P. M. Road, Fort, Mumbai – 400 001, on a half yearly basis as at the end of September and March every year. The report should be submitted within 15 days from the close of the respective half year. C.1.3. Advance Remittan

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yments should be made strictly as per the terms of the sale contract and are made directly to the account of the manufacturer (supplier) concerned. AD Category – I bank may frame their own internal guidelines to deal with such cases, with the approval of their Board of Directors. 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 guaranteehas been specifically waived by the Ministry of Finance, Government of India for advance remittances exceeding USD 100,000. 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 last remittance made in terms of the contract will be reckoned for the pu

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dash; 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) AD – Category – I bank may allow payment of interest on usance bills or overdue interest for a period of less than three years from the date of shipment at the rate

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eplacement 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 cost of equipment to be imported and installed at their overseas sites in connection with the setting up of their International Call Centres (ICCs) subject to the following co

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hould 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.6.2. 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 permitted to allow remittance for imports up to USD 300,000 where the importer of rough diamonds, rough precious and semi-precious stones has received the import bil

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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 constituent. C.7. Evidence of Import C.7.1. Physical Imports (i) In case of all imports, where value of foreign exchange remitted/ paid for import into India exceeds USD 100,000 or its equivalent, it is obligatory on the part of the AD Category – I bank through whom the relative remittance was made, to ensure that the importer submits :- (a) The Exchange Control copy of the Bill of En

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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, (b) the importer is a company listed on a stock exchange in India and whose net worth is not less than Rs.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 Government of India or its departments. (ii) The above facility may also be extended to autonomous bodies, including scientific bodies/academic institutions, such as Indian Institute of Science / Indian Institute of Technology, etc. whose accounts are audited by the Comptroller and Auditor General of India (CAG). AD Category – I bank may insist on a declaration from the auditor/CEO of such institutio

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rification 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 its 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 required under paragraph C.7. of Part III, within 3 months from the date of remittance involving foreign exchange exceeding USD 100,000, the AD Category – I bank should rigorously follow-up for the next 3 months, including issuing registered letters to the importer. (ii) AD Category – I bank should forward a statement on half-yearly basis as at the end of June &

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/2000-RB dated May 3, 2000, as amended from time to time. C.12. Import of Gold / Platinum / Silver by Nominated Banks / Nominated Agencies Nominated banks/agencies are permitted to import gold on loan basis, Suppliers Credit/Buyers Credit basis, consignment basis as also on unfixed price basis. However, all imports of gold will necessarily have to be on Documents against Payment (DP) basis. Accordingly, gold imports on Documents against Acceptance (DA) basis will not be permitted. These restrictions will however not apply to import of gold to meet the needs of exporters of gold jewellery. Letters of Credit (LC) to be opened by Nominated Banks / Agencies for import of gold under all categories will be only on 100 per cent cash margin basis. It is clarified that, consequent upon the issue of above instructions, import of gold against suppliers/buyers credit, as also import of gold on unfixed price basis has to necessarily observe the discipline stipulated relating to cash margins and Doc

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.12.2. Import of Gold / Platinum / Silver on unfixed price basis The nominated agency/bank may import gold on outright purchase basis subject to the condition that although ownership of the gold shall be passed on to the importer at the time of import itself, the price of gold shall be fixed later, as and when the importer sells the gold to the users. These instructions would also apply to import of platinum and silver. C.12.3. Direct Import of Gold AD Category – I bank can open Letters of Credit and allow remittances on behalf of EOUs, units in SEZs in the Gem & Jewellery sector and the nominated agencies / banks, for direct import of gold, subject to the following : (i) The import of gold should be strictly in accordance with the Foreign Trade Policy. (ii) The usance period of LCs opened for direct import of gold, should not exceed 90 days and on 100 per cent cash margin basis. (iii) Banker s prudence should be strictly exercised for all transactions pertaining to import of

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all documents pertaining to such transactions must be preserved for at least five years. (v) AD Category – I bank should follow up submission of the Bill of Entry by the importers as stipulated. vi) Head Offices/International Banking Divisions of AD Category -I banks shall henceforth submit the following statements to the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Central Office, Trade Division, Amar Building, Fort, Mumbai-400001: (a) Statement on half yearly basis (end March / end September) showing the quantity and value of gold imported by the nominated banks/ agencies/ EOUs/ SEZs in Gem & Jewellery sector, mode of payment-wise, as per Annex 3 ; (b) Statement on monthly basis showing the quantity and value of gold imports by the nominated agencies (other than the nominated banks)/ EOUs/ SEZs in Gem & Jewellery sector during the month under report as well as the cumulative position as at the end of the said month beginning from the 1st mo

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ld loan. (v) SBLC can be opened only on behalf of entities permitted to import gold on loan basis, viz. nominated agencies and 100% EOUs/units in SEZ, which are in the Gem and Jewellery sector. (vi) SBLC should be in favour of internationally renowned bullion banks only. AD Category – I bank can obtain a detailed list of internationally renowned bullion banks from the Gem & Jewellery Export Promotion Council. (vii) All other existing instructions on import of gold and opening of Letters of Credit, with usance period not exceeding 90 days, will continue to be applicable. (viii) AD Category – I banks must maintain adequate documentation with them to uniquely link all imports with the SBLC issued for the import of gold on loan basis. ix) The maximum period of gold loan shall be as per the Foreign Trade Policy 2009-14 or as notified by the Government of India from time to time. x) Accordingly, the maximum tenor of gold loan becomes 270 days at present (i.e. 90 days for manu

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and Anti-Money Laundering (AML) guidelines, issued by the Reserve Bank are adhered to while undertaking import of the metals and rough, cut and polished diamonds. Further, any large or abnormal increase in the volume of business should be closely examined to ensure that the transactions are bonafide and are not intended for interest / currency arbitrage. All other instructions relating to import of these metals and rough, cut and polished diamonds shall continue. [A.P.(DIR Series) Circular No.83 dated February 20, 2013] C.15. 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.16. Merchanting Trade AD Category &ndas

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h; I banks may note that short-term credit either by way of suppliers credit or buyers credit is not available for merchanting trade or intermediary trade transactions. Appendix List of Circulars consolidated in the Master Circular Import of Goods and Services AP (DIR Series) Circular No. 106 dated June 19, 2003 AP (DIR Series) Circular No. 4 dated July 19, 2003 AP (DIR Series) Circular No. 9 dated August 18, 2003 AP (DIR Series) Circular No. 15 dated September 17, 2003 AP (DIR Series) Circular No. 49 dated December 15, 2003 AP (DIR Series) Circular No. 66 dated February 6, 2004 AP (DIR Series) Circular No. 72 dated February 20, 2004 AP (DIR Series) Circular No. 2 dated July 9, 2004 AP (DIR Series) Circular No. 34 dated February 18, 2005 AP (DIR Series) Circular No. 1 dated July 12, 2005 AP (DIR Series) Circular No. 33 dated February 28, 2007 AP (DIR Series) Circular No. 34 dated March 2, 2007 AP (DIR Series) Circular No. 63 dated May 25, 2007 AP (DIR Series) Circular No. 77 dated June

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FEMA – 14/2013-14 – Dated:- 1-7-2013 – RBI/2013-14/14 Master Circular No.14/2013-14 July 1, 2013 To, All Category – I Authorised Dealer Banks Madam / Sir, Master Circular on Exports 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) 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 issued with a sunset clause of one year. This circular will stand withdrawn on July 01, 2014 and be replaced by an updated Master Circular on the subject. Yours faithfully, (

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ice Exports B.22 Export of Currency B.23 Forfaiting B.24 Exports to neighbouring countries by Road, Rail or River B.25 Border Trade with Myanmar B.26 Repayment of State Credits B.27 Counter –Trade Arrangements with Romania PART – 3 C. Operational Guidelines for AD Category – I banks C.1 Citing of Specific Identification Numbers C.2 GR/SDF/PP/SOFTEX procedure C.3(A) GR forms C.3(B) Mid-Sea Trans-Shipment of catch by Deep Sea Fishing Vessels C.4 SDF C.5 PP Forms C.6 SOFTEX Forms C.7 Random verification C.8 Certification for EEFC Credits C.9 Consolidation of Air Cargo/ Sea Cargo C.10 Delay in submission of shipping documents by exporters C.11 Check-list for Scrutiny of Forms C.12 Return of Documents to Exporters C.13 Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/Trade Representative C.14 Export Bills Register C.15 Follow-up of Overdue Bills C.16 Reduction in Invoice Value on Account of Prepayment of Usance Bills C.17 Reduction in Invoice Value in oth

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e (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 Act, 1999 (42 of 1999), the Reserve Bank has notified the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 relating to export of goods and services from India, hereinafter referred to as the Export Regulations . These Regulations have been notified vide Notification No. FEMA 23/2000-RB dated May 3, 2000, as amended fro

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ntracts and invoices shall be denominated either in freely convertible currency or in Indian Rupees but export proceeds shall be realised in freely convertible currency. However, export proceeds against specific exports may also be realised 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 the 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 / company functions, unless otherwise indicated. If, for any particular reason, they desire to deal with a different office of the Foreign Exchange Department, they may approach the Regional Office of its jurisdiction for necessary approval. (vii) Financial Year (April to March) is reckoned as the time base for all transaction

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volving any foreign exchange transaction directly or indirectly requires the waiver of GR/PP procedure from the Reserve Bank. B.2 Manner of Receipt and Payment 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 (Annex-3) in the following manner: a. Bank draft, pay order, banker s or personal cheques. b. Foreign currency notes/foreign currency travellers cheques from the buyer during his visit to India. c. Payment out of funds held in the FCNR/NRE account maintained by the buyer d. International Credit Cards of the buyer. Note: When payment for goods sold to overseas buyers during their visits is received in this manner, GR/SDF (duplicate) should be released by the AD Category – I banks only on receipt of funds in their Nostro account or if the AD Categor

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wellery 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 GR / SDF / PP 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 and services of value not exceeding USD 10,000 (US Dollar ten thousand). (effective from June 11, 2013) [Ref: A.P. (DIR Series) Circular No.109 dtd 11-06-2013] c. AD Category-I banks providing such facilities shall open a NOSTRO collection account for receipt of the ex

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RO 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 bonafides 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 the OPGSP concerned. k. OPGSPs who are already providing such services as per the specific holding-on approvals issued by the Reserve Bank shall open a l

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pectively. 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. B.3 Realisation and Repatriation of export proceeds It is obligatory on the part of the exporter to realise and repatriate the full value of goods or software to India within a stipulated period from the dat

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iod of realization and repatriation to India has been brought down to nine months from the date of export, till September 30, 2013. [Ref: . A.P.(DIR Series) Circular No.105 dtd 20-05-2013] B.4 Foreign Currency Account (i) Participants in international exhibition/trade fair have been granted general permission vide Regulation 7(7) of the Foreign Exchange Management (Foreign Currency Account by a Person Resident 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) Reserv

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open, hold and maintain a Foreign Currency Account with an AD Category – I bank in India subject to conditions stipulated in Regulation 6 (A) of Notification No. FEMA 10/2000-RB dated May 3, 2000 and as amended from time to time. (v) A person resident in India being a project / service exporter may open, hold and maintain foreign currency account with a bank outside or in India, subject to the standard terms and conditions 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 / coloured gemstones / diamond and coloured gemstones studded jewellery / plain gold jewellery and having an average annual turnover of Rs. 3 crores or above during the preceding three licensing years (l

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a, Central Office, Trade Division, Mumbai. (vi) Condition mentioned at Para B.6 (iv) shall also apply. B.6 Exchange Earners Foreign Currency (EEFC) Account (i) A person resident in India may open with, an AD Category – I bank in India, an account in foreign currency called the Exchange Earners Foreign Currency (EEFC) Account, in terms of Regulation 4 of the Foreign Exchange Management (Foreign Currency Account by a Person Resident in India) Regulations, 2000 notified under Notification No. FEMA 10/2000-RB dated May 3, 2000 as amended from time to time. 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. However, such resident Indian close relative, being made eligible to become joint account holder, shall not be eligible to operate the account during the life time of the resident account holder (ii) This account shall be maintained only in the f

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urrency, as India is still not fully convertible on Capital Account. (iv) It may be noted that the provisions at paragraph (iii) a) and (iii) b) above will apply, mutatis mutandis, also to holder of either a Resident Foreign Currency Account (Domestic) or a Diamond Dollar Account (DDA). [ Ref: A.P. (DIR Series) Circular No.12 dated 31-07-2012 A.P. (DIR Series) Circular No.79 dtd 22-01-2013] (v) The eligible credits represent – a. inward remittance received through normal banking channel, other than the remittance received pursuant to any undertaking given to the Reserve Bank or which represents foreign currency loan raised or investment received from outside India or those received for meeting specific obligations by the account holder. b. Payments received in foreign exchange by a unit in Domestic Tariff Area (DTA) for supplying goods to a unit in Special Economic Zone out of its foreign currency account. (vi) AD Category – I banks may permit their exporter constituents to exten

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be sent for the purpose of normal business operations of the office (trading / non-trading) / branch or representative office outside India subject to the following terms and conditions: the overseas branch/office has been set up or representative is posted overseas for conducting normal business activities of the Indian entity; the overseas branch/office/representative shall not enter into any contract or agreement in contravention of the Act, Rules or Regulations made there under; the overseas office (trading / non-trading) / branch / representative should not create any financial liabilities, contingent or otherwise, for the head office in India and also not invest surplus funds abroad without prior approval of the Reserve Bank. Any funds rendered surplus should be repatriated to India. (iii) The details of bank accounts opened in the overseas country should be promptly reported to the AD Bank. (iv) AD Category – I banks may also allow remittances by a company incorporated in

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he shipment of goods is made within one year from the date of receipt of advance payment; the rate of interest, if any, payable on the advance payment does not exceed London Inter-Bank Offered Rate (LIBOR) + 100 basis points; and the documents covering the shipment are routed through the AD Category – I bank through whom the advance payment is received. Provided that in the event of the exporter s inability to make the shipment, partly or fully, within one year from the date of receipt of advance payment, no remittance towards refund of unutilized portion of advance payment or towards payment of interest, shall be made after the expiry of the said period of one year, without the prior approval of the Reserve Bank. (2) 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

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y or fully, no remittance towards refund of unutilized portion of advance payment or towards payment of interest should be made without the prior approval of the Reserve Bank. (3) 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. Note: AD Category – I banks may also be guided by the Master Circular on Guarantees and Co-acceptances issued by DBOD. B.9 GR Approval for Trade Fair/Exhibitions abroad Firms / Companies and other organizations participating in Trade Fair/Exhibition abroad can take/export goods for exhibition and sale outside India without the prior approval of the Reserve Bank. Unsold exhibit items may be sold outside the exhibition/trade fair in the same country or in a third country. Such sales at discounted value are also permissible. It would also be permissib

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al 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 Part Drawings /Undrawn Balances (i) In certain lines of export trade, it is the practice to leave a small part of the invoice value undrawn for payment after adjustment 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: The amount of undrawn balance is considered normal in the particular line of export trade, subject to a maximum

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ceeds by a specified date within the period prescribed for realization of proceeds of the export. This procedure should be followed even if, according to the practice in certain trades, a bill for part of the estimated value is drawn in advance against the exports. (ii) The agents/consignees may deduct from sale proceeds of the goods expenses normally incurred towards receipt, storage and sale of the goods, such as landing charges, warehouse rent, handling charges, etc. and remit the net proceeds to the exporter. (iii) The account sales received from the Agent/Consignee should be verified by the AD Category – I banks. Deductions in Account Sales should be supported by bills/receipts in original except in case of petty items like postage/cable charges, stamp duty, etc. (iv) In case of goods exported on consignment basis, freight and marine insurance must be arranged in India. AD Category – I banks may allow the exporters to abandon the books, which remain unsold at the expir

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ls granted. B.14 Direct dispatch of documents by the exporter (i) AD Category – I banks should normally dispatch shipping documents to their overseas branches/correspondents expeditiously. However, they may dispatch shipping documents direct to the consignees or their agents resident in the country of final destination of goods in cases where: Advance payment or an irrevocable letter of credit has been received for the full value of the export shipment and the underlying sale contract/letter of credit provides for dispatch of documents direct to the consignee or his agent resident in the country of final destination of goods. The AD Category – I banks may also accede to 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 realisation of export proceeds. Documents in respect of goods or software are accompanied with

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r customer of AD Category – I bank for a period of at least six months. c) The exporter s account with the AD Category – I bank is fully compliant with the Reserve Bank s extant KYC / AML guidelines. d) The AD Category – I bank is satisfied about the bonafides of the transaction. In case of doubt, the AD Category – I bank may consider filing Suspicious Transaction Report (STR) with FIU_IND (Financial Intelligence Unit in India). B.15 Invoicing of Software Exports (i) For long duration contracts involving series of transmissions, the exporters should bill their overseas clients periodically, i.e., at least once a month or on reaching the milestone as provided in the contract entered into with the overseas client and the last invoice / bill should be raised not later than 15 days from the date of completion of the contract. It would be in order for the exporters to submit a combined SOFTEX form for all the invoices raised on a particular overseas client, including

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overed by a GR form already filed with Customs is short-shipped, the exporter must give notice of short-shipment to the Customs in the form and manner prescribed. In case of delay in obtaining certified short-shipment notice from the Customs, the exporter should give an undertaking to the AD banks to the effect that he has filed the short-shipment notice with the Customs and that he will furnish it as soon as it is obtained. (ii) Where a shipment has been entirely shut out and there is delay in making arrangements to re-ship, the exporter will give notice in duplicate to the Customs in the form and manner prescribed, attaching thereto the unused duplicate copy of GR form and the shipping bill. The Customs will verify that the shipment was actually shut out, certify the copy of the notice as correct and forward it to the Reserve Bank together with unused duplicate copy of the GR form. In this case, the original GR form received earlier from Customs will be cancelled. If the shipment is

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based facilities would be permitted against the balances in the Escrow Account. (iv) Application for permission for opening an Escrow Account may be made by the overseas exporter / organisation through his / their AD Category – I bank to the Regional Office concerned of the Reserve Bank. B.18 Export of Goods on Lease, Hire, etc. Prior approval of the Reserve Bank is required for export of machinery, equipment, etc., on lease, hire basis under agreement with the overseas lessee against collection of lease rentals/hire charges and ultimate re-import. Exporters should apply for necessary permission, through an AD Category – I banks, to the Regional Office concerned of the Reserve Bank, giving full particulars of the goods to be exported. B.19 Export on Elongated Credit Terms Exporters intending to export goods on elongated credit terms may submit their proposals giving full particulars through their banks for consideration to the Regional Office concerned of the Reserve Bank.

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pertaining to the goods / services supplied by the SEZ unit to the DTA unit and for payment in foreign exchange for the same should be mentioned. [Ref: A. P. (DIR Series) Circular No.46 dated 23-10-2012] B.21 Project Exports and Service Exports Export of engineering goods on deferred payment terms and execution of turnkey projects and civil construction contracts abroad are collectively referred to as Project Exports . Indian exporters offering deferred payment terms to overseas buyers and those participating in global tenders for undertaking turnkey/civil construction contracts abroad are required to obtain the approval of the AD Category – I banks/ EXIM Bank/ Working Group at post-award stage before undertaking execution of such contracts. Regulations relating to Project Exports and Service Exports are laid down in the revised Memorandum of Instructions on Project and Service Exports (PEM- October 2003 as amended from time to time). In order to provide greater flexibility to pr

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; I bank(s) / EXIM Bank / Working Group may permit exporters to open, maintain and operate one or more foreign currency account/s in a currency(ies) of their choice with inter-project transferability of funds in any currency or country. The Inter-project transfer of funds will be monitored by the AD Category – I bank(s) / EXIM Bank / Working Group. (iii) Deployment of Temporary Cash Surpluses Project / Service exporters may deploy their temporary cash surpluses, generated outside India, in the following instruments / products, subject to monitoring by the AD Category – I bank(s) / EXIM Bank / Working Group : investments in short-term paper abroad including treasury bills and other monetary instruments with a maturity or remaining maturity of one year or less and the rating 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. , deposits with branches / subsidiaries outside India of AD Category – I banks in India.

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payable by the exporter as approved by the EXIM Bank / AD Category – I banks concerned may be done through an AD bank. Such remittances may be made in advance in one lump sum or at monthly intervals as approved by the authority concerned. B.24 Exports to neighbouring countries by Road, Rail or River The following procedure should be adopted by exporters for filing original copies of GR/SDF forms where exports are made to neighboring countries by road, rail or river transport: (i) In case of exports by barges/country craft/road transport, the form should be presented by exporter or his agent at the Customs 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 designate

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rt of goods and services against repayment of state credits granted by erstwhile USSR will continue to be governed by the extant directions issued by the Reserve Bank, as amended from time to time. B.27 Counter –Trade Arrangements with Romania The Reserve Bank will consider counter trade proposals from Indian exporters with Romania involving adjustment of value of exports from India against value of imports made into India in terms of a voluntarily entered arrangement between the concerned parties, subject to the condition, among others that the Indian exporter should utilize the funds for import of goods from Romania into India 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 (i) In all applications / correspondence with the Reserve Bank, the specific identification number as available on the GR, PP and SOFTEX forms should invar

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assessed value. They will then return the duplicate copy of the form to the exporter and retain the original for transmission to the Reserve Bank. Exporters should submit the duplicate copy of the GR form again to Customs along with the cargo to be shipped. After examination of the goods and certifying the 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. 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 GR form. After the documents have been negotiated / sent for collection, the AD Category – I banks should report the transaction to the Reserve Bank in statement ENC under cover of appropriate R-Supplementary Return. The duplicate copy of the form together with a copy of invoice etc. shall

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For Printing of GR Form) Accordingly, the exporters have the option to use the GR Forms available on-line as well. C.3 (B) Mid-Sea Trans-shipment of catch by Deep Sea Fishing Vessels (effective from November 21, 2011). Since deep sea fishing involves continuous sailing outside the territorial limit, trans-shipment of catches takes place in the high sea leading to procedural constraints in regulatory reporting requirement viz. the Declaration of Export in terms of Notification No. FEMA 23/2000-RB dated May 3, 2000. For mid-sea trans-shipment of catches by Indian owned vessels, as per the norms prescribed by the Ministry of agriculture, Government of India, the GR declaration procedure in this 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. (i) The exporters may submit the GR form, duly signed by the Master of the Vessel in

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d both the copies may be submitted to the Customs at the registered port of the vessel or any other port as approved by Ministry of Agriculture. GR (Original) will be retained by the Customs for capturing of data in Customs Electronic Data Interchange. (ix) Customs will give their running serial number on both the copies of GR Form and will return the duplicate copy to the exporter as the value certification of the export has already been done as mentioned above. (x) Rules, Regulations and Directions issued in respect of the procedure for submission of the GR form by exporter to the AD Category-I banks, and the disposal of these forms by these banks will be same as applicable to the other exporters. C.4 SDF The following system may be followed in case of SDF: (i) The SDF should be submitted in duplicate (to be annexed to the relative shipping bill) to the Commissioner of Customs concerned. (ii) After verifying and authenticating the declaration in SDF, the Commissioner of Customs will

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e efforts made by them, the share of exporters in the amount so received is disbursed through the bank which had handled the shipping documents. In such cases, ECGC and private insurance companies regulated by IRDA will issue a certificate to the bank, which had handled the relevant shipping documents after full proceeds have been received. The certificate will indicate the number of declaration form, name of the exporter, name of the AD Category – I banks, date of negotiation, bill number, invoice value and the amount actually received by ECGC and private insurance companies regulated by IRDA. C.5 PP Forms The manner of disposal of PP forms is the same as that for GR forms. Postal Authorities will allow export of goods by post only if the original copy of the form has been countersigned by an AD Category – I bank. Therefore, PP forms should be first presented by the exporter to an AD Category – I bank for countersignature. (i) The AD Category – I banks will cou

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ance 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 the arrangements made for realization of the export proceeds, that he could do so. In such cases, particulars of advance payment/letter of credit / AD Category – I bank s certification of standing, etc., of the exporter should be furnished on the form under proper authentication. (v) Any alteration in the name and address of consignee on the PP form should also be authenticated by the AD Category – I banks under his stamp and signature. C.6 SOFTEX Forms A software exporter, whose annual turnover is at least Rs. 1000 crore or who files at least 600 SOFTEX forms annually, will be eligible to submit a statement in excel format as per Annexure A, giving all particulars alongwith quadruplicate set of SOFTEX form to the nearest STPI. STPI will then verify the details and decide on a percentage sample check o

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ef: A. P. (DIR Series) Circular No.46 dated 23-10-2012] The new procedure has been made effective at all STPIs and SEZs / EPZs / 100%EOU / DTA since 1.1.2013. [Ref: A.P. (DIR Series) Circular No.66 dtd 01-01-2013] C.7 Random verification In all the above procedures, AD Category – I bank should ensure, by random check of the relevant duplicate forms by their internal / concurrent auditors, that non-realization or short realization allowed, if any, is within the powers delegated to them or has been duly approved by the Reserve Bank, wherever necessary. C.8 Certification for EEFC Credits Where a part of the export proceeds are credited to an EEFC account, the export declaration (duplicate) form may be certified as under: Proceeds amounting to …… representing ….. per cent of the export realisation credited to the EEFC account maintained by the exporter with…… C.9 Consolidation of Air Cargo/Sea Cargo (a) Consolidation of Air Cargo Where air cargo is

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tion, also accept FCR issued by Shipping companies of repute/IATA approved agents (in lieu of bill of lading), for purchase/discount/collection of shipping documents even in cases, where export transactions are not backed by letters of credit, provided their relative sale contract with overseas buyer provides for acceptance of FCR as a shipping document in lieu of bill of lading. However, the acceptance of such FCR for purchase/discount would purely be the credit decision of the bank concerned who, among others, should satisfy itself about the bona fides of the transaction and the track record of the overseas buyer and the Indian supplier since FCRs are not negotiable documents. It would be advisable for the exporters to ensure due diligence on the overseas buyer, in such cases. C.10 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 ban

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the marine insurance is taken by the exporters on buyer s account to verify, that the actual amount paid is received from the buyer through invoice and the bill. To accept the Bill of Lading/Airway Bill issued on freight prepaid basis where the sale contract is on f.o.b., f.a.s. etc. basis provided the amount of freight has been included in the invoice and the bill. To negotiate the documents, in cases where the documents are being negotiated by a person other than the exporter who has signed GR/PP/SDF /SOFTEX Form for the export consignment concerned, after ensuring compliance with Regulation 12 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000. To accept the variations in the value declared to the customs authorities and that is reflected on the export documents which stem from the terms of contract, on production of documentary evidence after verifying the arithmetical accuracy of the calculations and on conforming the terms of underlying contracts. So

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ers declare to the Customs the full export value based on the contract price, invoices submitted along with shipping documents for negotiation/ collection may reflect a different value arrived at after taking into account the results of analysis of samples or late shipment penalty, as the case may be. To accept for negotiation or collection the bills for exports by sea or air which fall short of the value declared on GR/SDF forms on account of trade, only if the discount has been declared by the exporter on relative GR/SDF form at the time of shipment and accepted by Customs. C.12 Return of Documents to Exporters The duplicate copies of GR/SDF/PP forms 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.13 Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/Trade Representative AD Category – I banks may deli

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C.15 Follow-up of Overdue Bills (i) AD Category – I banks should closely watch realization of bills and in cases where bills remain outstanding, beyond the due date for payment or 12 months from the date of export, the matter should be promptly taken up with the concerned exporter. If the exporter fails to arrange for delivery of the proceeds within 12 months or seek extension of time beyond 12 months, the matter should be reported to the Regional Office concerned of the Reserve Bank stating, where possible, the reason for the delay in realizing the proceeds. (ii) The duplicate copies of GR / SDF / PP / SOFTEX Forms should, continue to be held by AD Category – I banks until the full proceeds are realised, except in case of undrawn balances. (iii) AD Category – I banks should follow up export outstandings 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 pr

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n invoice value on account of cash discount to overseas buyers for prepayment of the usance bills. AD Category – I banks may allow cash discount to the extent of amount of proportionate interest on the unexpired period of usance, calculated at the rate of interest stipulated in the export contract or at the prime rate/LIBOR of the currency of invoice where rate of interest is not stipulated in the contract. C.17 Reduction in Invoice Value in other cases (i) If, after a bill has been negotiated or sent for collection, its amount is to be reduced for any reason, AD Category – I banks may approve such reduction, if satisfied about genuineness of the request, provided: The reduction does not exceed 25 per cent of invoice value: It does not relate to export of commodities subject to floor price stipulations The exporter is not on the exporters caution list of the Reserve Bank, and The exporter is advised to surrender proportionate export incentives availed of, if any. (ii) In th

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orter should be advised to surrender proportionate export incentives, if any, received by him. C.19 Change of buyer/consignee Prior approval of the Reserve Bank is not required if, after goods have been shipped, they are to be transferred to a buyer other than the original buyer in the event of default by the latter, provided the reduction in value, if any, involved does not exceed 25 per cent of the invoice value and the realization of export proceeds is not delayed beyond the period of 12 months from the date of export. C.20 Extension of time and Self write-off by the exporters (i) For export proceeds due within the prescribed period during a financial year all exporters (Including Status Holder exporters) have been allowed to write-off (including reduction in invoice value) outstanding export dues and extend the prescribed period of realization beyond 12 months or further period as applicable, provided (a) The aggregate value of such export bills written-off (including reduction in

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behalf of all the banks. (iv) Within a month from the close of the financial year, exporters should submit a statement (Annex 4), giving details of export proceeds due, realised and not realised to the AD Category – I banks concerned. (v) The AD Category – I banks will be required to verify the statement with their records and review the export performance of the exporter during the financial year to ascertain that in cases where the 10 per cent limit of self extension, write-off (including reduction in invoice value) and non-realization has been breached, the exporter has sought necessary approval for write-off, reduction in invoice value or extension of time, as the case may be, for the excess over the 10 per cent limit before the end of the financial year. Export bills due in the financial year for which the exporter has extended the period of realization on his own (within the 10 per cent limit) or sought extension of time from the AD Category – I banks but unrea

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under investigation by Directorate of Enforcement / Central Bureau of Investigation or other investigating agencies, The AD Category – I bank is satisfied that the exporter has not been able to realise export proceeds for reasons beyond his control, The exporter submits a declaration that the export proceeds will be realised during the extended period, 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. 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. In cases where the exporter has filed suits abroad against the buyer, extension may be granted irresp

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to write-off adduced in the A.P. (DIR Series) Circular No. 03 dated 22 July 2010. After liberalizing and simplifying the procedure, 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 under noted categories : a) The overseas buyer has been declared insolvent and a certificate from the official liquidator i

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credit value and actual export value or between the provisional and the actual freight charges but the amount has remained unrealized consequent on dishonour 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 GR / SDF Nos. to be written off, Bill No., invoice value, commodity exported, country of export. The CA certifi

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ditors (including external auditors appointed by authorised dealers) should carry out random sample check / percentage check of write-off outstanding export bills. ix) Cases not covered by the above instructions / beyond the above limits, may be referred to the concerned Regional Office of Reserve Bank of India. [Ref: A. P. (DIR Series) Circular No.88 dtd 12-03-2013] C.23 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 su

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bove relaxation is applicable for the exports made with effect from August 27, 2009. The AD Category – I banks are advised not to insist on the surrender of proportionate export incentives, other than under the Duty Drawback Scheme, if availed of, by the exporter under any of the Export Promotion Schemes under FTP 2009-14 , subject to fulfillment of conditions as stated above. The drawback amount has to be recovered even if the claim is settled by the Export Credit Guarantee Corporation of India Limited (ECGC) or the write –off is allowed by the Reserve Bank. C.26 Shipments Lost in Transit When shipments from India for which payment has not been received either by negotiation of bills under letters of credit or otherwise are lost in transit, the AD Category – I banks must ensure that insurance claim is made as soon as the loss is known. In cases where the claim is payable abroad, the AD Category – banks must arrange to collect the full amount of claim due on the lost

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e as on the date of balance sheet of the unit in SEZ. (ii) The details of export of goods are documented in GR (O) forms / DTR as the case may be while details of import of goods / services are recorded through A1 / A2 form as the case may be. The relative GR / SDF forms will be treated as complete by the designated AD Category – I banks only after the entire proceeds are adjusted / received. (iii) Both the transactions of sale and purchase in R – Returns under FET-ERS are reported separately. (iv) The export / import transactions with ACU countries are kept outside the arrangement. (v) All the relevant documents are submitted to the concerned AD Category – I banks who should comply with all the regulatory requirements relating to the transactions. C.27 (B) – Set-off of export receivables against import payables : (effective from November 17, 2011). AD category –I banks may deal with the cases of set-off of export receivables against import payables, subject to

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ory – I banks may allow payment of commission, either by remittance or by deduction from invoice value, on application submitted by the exporter. The remittance on agency commission may be allowed subject to the following conditions: Amount of commission has been declared on GR/SDF/PP/SOFTEX form and accepted by the Customs authorities or Ministry of Information Technology, Government of India / EPZ authorities as the case may be. In cases where the commission has not been declared on GR/SDF/PP/SOFTEX form, remittance may be allowed after satisfying the reasons adduced by the exporter for not declaring commission on Export Declaration Form, provided a valid agreement/written understanding between the exporters and/or beneficiary for payment of commission exists. The relative shipment has already been made. (ii) AD Category – I banks may allow payment of commission by Indian exporters, in respect of their exports covered under counter trade arrangement through Escrow Account

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ecord of the exporter (ii) verify the bonafides of the transactions (iii) obtain from the exporter a certificate issued by DGFT / Custom authorities that no incentives have been availed by the exporter against the relevant export or the proportionate incentives availed, if any, for the relevant export have been surrendered (iv) obtain an undertaking from the exporter that the goods will be re-imported within three months from the date of remittance and (v) ensure that all procedures as applicable to normal imports are adhered to. C.30 Exporters Caution List (i) AD Category – I banks will also be advised whenever exporters are cautioned in terms of provisions contained in Regulation 17 of Export Regulations (Annex 2). They may approve GR/SDF/PP forms of exporters who have been placed on caution list if the exporters concerned produce evidence of having received an advance payment or an irrevocable letter of credit in their favour covering the full value of the proposed exports. (i

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Current Account Transcation) Rules, 2000); (2) They shall come into effect on the 1st day of June 2000. 2. Definitions. In these rules, unless the context otherwise requires : (a) Act means the Foreign Exchange Management Act, 1999 (42 of 1999); (b) Drawal means drawal of foreign exchange from an ealizatio person and includes opening of Letter of Credit or use of International Credit Card or International Debit Card or ATM Card or any other thing by whatever name called which has the effect of creating foreign exchange liability; I Schedule means a schedule appended to these rules; (d) The words and expressions not defined in these rules but defined in the Act shall have the same meanings respectively assigned to them in the Act. 3. Prohibition on drawal of Foreign Exchange.Drawal of foreign exchange by any person for the following purpose is prohibited, namely: a. a transaction specified in the Schedule I; or b. a travel to Nepal and/or Bhutan; or c. a transaction with a person reside

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thing contained in sub-rule (1), restrictions imposed under rule 4 or rule 5 shall continue to apply where the drawal of foreign exchange from the Exchange Earners Foreign Currency (EEFC) Account is for the purpose specified in items 10 and 11 of Schedule II, or item 3, 4, 11, 16 & 17 of Schedule III as the case may be. 7. Use of International Credit Card while outside India Nothing contained in Rule 5 shall apply to the use of International Credit Card for making payment by a person towards meeting expenses while such person is on a visit outside India. Schedule I Transactions which are Prohibited (see rule 3) 1. Remittance out of lottery winnings. 2. Remittance of income from racing/riding etc. or any other hobby. 3. Remittance for purchase of lottery tickets, banned/proscribed magazines, football pools, sweepstakes, etc. 4. Payment of commission on exports made towards equity investment in Joint Ventures/ Wholly Owned Subsidiaries abroad of Indian companies. 5. Remittance of div

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ansport, (Chartering Wing) 4. Payment of import through ocean transport by a Govt. Department or a PSU on c.i.f. basis (i.e. other than f.o.b. and f.a.s. basis) Ministry of Surface Transport, (Chartering Wing) 5. Multi-modal transport operators making remittance to their agents abroad Registration Certificate from the Director General of Shipping 6. Remittance of hiring charges of transponders by (a) TV Channels (b) Internet Service providers Ministry of Information and Broadcasting Ministry of Communication and Information Technology 7. Remittance of container detention charges exceeding the rate prescribed by Director General of Shipping Ministry of Surface Transport (Director General of Shipping) 8. Remittances under technical collaboration agreements where payment of royalty exceeds 5% on local sales and 8% on exports and lump-sum payment exceeds USD 2 million Ministry of Commerce and Industry 9. Remittance of prize money/sponsorship of sports activity abroad by a person other than

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manently resident in India and – (a) is a citizen of a foreign State other than Pakistan; or (b) is a citizen of India, who is on deputation to the office or branch or subsidiary or joint venture in India of such foreign company. exceeding USD 100,000 per year, per recipient, in all other cases. Explanation: For the purpose of this item, a person resident in India on account of his employment or deputation of a specified duration (irrespective of length thereof) or for a specific job or assignment; the duration of which does not exceed three years, is a resident but not permanently resident. 8. Release of foreign exchange, exceeding USD 25,000 to a person, irrespective of period of stay, for business travel, or attending a conference or specialized training or for maintenance expenses of a patient going abroad for medical treatment or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/check-up. 9. Release of exchange for meeting expe

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expenses. 18. Omitted (Amendments) (Notification G.S.R..663 (E) dated August 17,2000,S.O.301(E) dated March 30, 2001, G.S.R..442 dated November 2,2002, G.S.R..831(E) dated December 20,2002, G.S.R..33(E) dated January 16,2003,G.S.R..397(E) dated May 14,2003, G.S.R..731(E) dated September 11,2003, G.S.R..849 (E) dated October 29,2003, G.S.R..608(E) dated September 13,2004), G.S.R.511(E) and G.S.R.512(E) dated July 28,2005 , G.S.R.412(E) dated July 11,2006., G.S.R.349(E) dated July 28, 2006, G.S.R.349 (E) dated May 22, 2009 and G.S.R.382(E) dated May 5, 2010. Please Note: @ @May be read with A.P.(DIR Series)Circular No.26 dated January 14,2010. PART 5 Appendix List of Circulars which have been consolidated in the Master Circular on Export of Goods and Services Sl. No. Circular No. Date 1. A.D. (MA Series) Circular No.15 May 31, 1993 2. A.P. (DIR Series) Circular No.12 September 9, 2000 3. A.P. (DIR Series) Circular No.4 August 27, 2001 4. A.P. (DIR Series) Circular No.5 August 27, 2001 5

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A.P. (DIR Series) Circular No.61 December 14, 2002 25. A.P. (DIR Series) Circular No.62 December 17, 2002 26. A.P. (DIR Series) Circular No.78 February 14, 2003 27. A.P. (DIR Series) Circular No.91 April 1, 2003 28. A.P. (DIR Series) Circular No.94 April 26, 2003 29. A.P. (DIR Series) Circular No.100 May 2, 2003 30. A.P. (DIR Series) Circular No.104 May 31, 2003 31. A.P. (DIR Series) Circular No.105 June 16, 2003 32. A.P. (DIR Series) Circular No.8 August 16, 2003 33. A.P. (DIR Series) Circular No.12 August 20, 2003 34. A.P. (DIR Series) Circular No.20 September 23, 2003 35. A.P. (DIR Series) Circular No.22 September 24, 2003 36. A.P. (DIR Series) Circular No.26 October 3, 2003 37. A.P. (DIR Series) Circular No.30 October 21, 2003 38. A.P. (DIR Series) Circular No.32 October 28, 2003 39. A.P. (DIR Series) Circular No.40 December 5, 2003 40. A.P. (DIR Series) Circular No.61 January 31, 2004 41. A.P. (DIR Series) Circular No.68 February 11, 2004 42. A.P. (DIR Series) Circular No.73 Febr

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13, 2008 62. A.P (DIR Series) Circular No.43 December 26, 2008 63. A.P (DIR Series) Circular No.51 February 13, 2009 64. A.P. (DIR Series) Circular No.60 March 26, 2009 65. A.P. (DIR Series) Circular No.70 June 30, 2009 66. A.P (DIR Series) Circular No.13 October 29, 2009 67. A.P. (DIR Series) Circular No.14 October 30, 2009 68. A.P. (DIR Series) Circular No.03 July 22, 2010 69. A.P. (DIR Series) Circular No.17 November 16, 2010 70. A.P. (DIR Series) Circular No.30 December 23, 2010 71. A.P. (DIR Series) Circular No.31 December 27, 2010 72. A.P. (DIR Series) Circular No.47 March 31, 2011 73. A.P. (DIR Series) Circular No.15 September 15, 2011 74. A.P. (DIR Series) Circular No.35 October 14, 2011 75 A.P. (DIR Series) Circular No.40 November 01, 2011 76. A.P. (DIR Series) Circular No.47 November 17, 2011 77. A.P. (DIR Series) Circular No.48 November 21, 2011 78. A.P. (DIR Series) Circular No.65 January 12, 2012 79. A.P. (DIR Series) Circular No.73 January 31, 2012 80. A.P. (DIR Series)

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Export of Goods and Services – Project Exports – FEMA – 118 – Dated:- 26-6-2013 – RBI/2012-13/548 A.P. (DIR Series) Circular No.118 June 26, 2013 To All Authorised Dealer Category – I Banks Madam / Sir, Export of Goods and Services – Project Exports Attention of Authorized Dealers is invited to Para B.7 (i) and C.5 (i) of Memorandum of Instructions on Project and Service Exports (PEM), enclosed to A.P.(DIR Series) Circular No.32 dated October 28, 2003, in terms of which an exporter undertaking Project Exports and Service contracts abroad should submit form DPX1, PEX-1 and TCS-1 to the Approving Authority (AA) i.e. AD Bank/ Exim Bank/ Working Group, within 15 days of entering into contract for grant of post-award approval. 2. On a revi

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Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 24-6-2013 Last Replied Date:- 30-12-1899 – On Goods and Service Tax (GST) front, there is now some news to cheer about. The Empowered Committee of State Finance Ministers which met for two days on 28-29 January, 2013 cleared the major hurdles in introduction of GST. However, we are not still sure as to whether it could come in 2014 or even later. Now the onus is on the Parliament to quickly clear the Constitutional Amendment Bill, 2011 which is now almost two years old. The Centre and the states last week crossed one major hurdle in the way of Goods & Services Tax (GST) by agreeing to a compensation formula for the Central Sales Tax (CST). A sub-committee of the Centre and states recommended 100 per cent compensation to states for a cut in CST from four per cent to two per cent for 2010-11, 75 per cent for 2011-12 and 50 per cent for 2012-13, respectively and as a result, Centre will now have to pay ? 34,000 crore as

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generate required funds for various developmental works. Further, there should not be dual authority for the same tax. Also in some states, there are peculiar local taxes such as purchase tax, mandi tax, infrastructure development cess, coal cess, mining cess or royalty etc. There is a need to have a clarity and consensus on whether such taxes be subsumed in GST. Ideally yes. Economically, states have an issue as every tax is going to be subsumed in GST and states may loose on account of such taxes. How centre and states are going to address this is still not certain. GST would become a dream tax only if it is a simple and comprehensive tax leaving no room for any confusion or bottleneck leading to any inconsistency. GST : What Next Time to wrap up loose ends Not likely before 2014 LS elections Constitutional Amendment Bill, 2011 – Report of Standing Committee likely in Budget session, passage by winter session 2013 GST rate – band may be introduced Consensus required at Empo

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e Constitution. The Empowered Committee of State Finance Ministers in May, 2013 meeting agreed to have a common exempted list of over 90 goods – both for CGST and SGST under proposed GST regime. Presently there are 96 items in exempted goods category for Value Added Tax and Centre has 243 items exempted under Central Excise. Centre will, therefore, prune down these exemptions in phases. The Committee also agreed for limit of Rs. one crore and 0.5 per cent floor rate for the compounding scheme which allows a trader to pay minimum tax but not avail the tax credit. There is no agreement, yet on common threshold limit for traders to be registered as well as for dual control of traders. The sub-committee has recommended that under GST, a trader with a turnover upto ₹ 1.5 crore should be controlled by the State Government while those with a turnover above ₹ 1.5 crore may be controlled by both-states and the centre. www.taxmanagementindia.com For GST network, a special purpose com

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FEMA – 108 – Dated:- 11-6-2013 – RBI/2012-13/527 A.P. (DIR Series) Circular No. 108 June 11, 2013 To, All Category – I Authorised Dealer Banks Madam / Sir, Export of Goods and Services- Realization and Repatriation period for units in Special Economic Zones (SEZ) Attention of Authorized Dealer banks is invited to A. P. (DIR Series) Circular No. 91 dated April 1, 2003. In terms of provisions of Para A of the said circular, time limit for realization and repatriation of export proceeds, for the exports made by units in Special Economic Zones (SEZs), was done away with. 2. It has now been decided that the units located in SEZs shall realize and repatriate, full value of goods/software/services, to India within a period of twelve months from t

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VAT and Sales Tax – Stay – requirement of pre-deposit – whether to deposit tax with interest etc. or only the tax portion alone – Section 17D(5) of KGST Act – interest is not included – HC – TMI Updates – Highlights

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VAT and Sales Tax – The intention of the legislature under the TNGST is to treat chilly and chilly powder, coriander and coriander powder, and turmeric and turmeric powder as one and the same goods – HC – TMI Updates – Highlights

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VAT and Sales Tax – Scope of the term cloth – KGST – Entry 10 of the Third Schedule is not intended to cover any products made from cloth such as bed sheets, bed covers, towels, napkins etc. – HC – TMI Updates – Highlights

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VAT and Sales Tax – KGST assessments & CST assessment – detergents, cleaning agents and laundry brightners. – the product in effect is a cleaning agent cum disinfectant and is squarely covered by Entry 51 – HC – TMI Updates – Highlights

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VAT and Sales Tax – Penalty – Tamil Nadu GST Act, 1959 – Even though Sec. 16(2) had undergone amendment w.e.f. 20.5.93, necessary ingredients of willful non-disclosure including the penalty, remains as it is. – HC – TMI Updates – Highlights

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VAT and Sales Tax – Bone meal – Bone meal cannot qualify as an organic manure for the purpose of Entry 17 of the Third Schedule to the KGST Act. – assesee relieved of the liability for the payment of the interest. – HC – TMI Updates – Highlights

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