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Laws for Export of Goods from India

By Bhavneet Vohra July 29, 2016


In the previous article, we had covered the various which regulate the Foreign Trade in India and the different kinds of preliminary registrations that are required by every business to enter into the Import-export trade. In this article, we will cover specifically the export procedure and the various legal provisions associated with the same.

Regulations and Procedures of Export in India

What kind of goods can be exported from India to other countries?

India adopted Indian Trade Classification based on Harmonised System of Coding popularly known as the ITC-HS Codes which includes an eight digit code to suit the national trade requirements for import-export operations. The following list specifies the various types of goods that can be exported:

  1. Freely Exported Goods: The goods which do not require any license to be exported can be referred to as the Freely Exported Goods. Specifically for these goods only an IEC (Import Export Code) needs to be obtained.
  2. Restricted Goods: The second type of goods include which cannot be exported freely but requires authorization and license for the same.
  3. Prohibited Goods: These include those items which are strictly prohibited by law to be exported to the other nation.

The whole list can be accessed through the following link: http://www.eximguru.com/exim/dgft/itc-hs-export-schedule-2/table-a-goods-falling-in-more-than-one-chapter-of-itc-hs-classification.aspx

 What taxes and duties are imposed on the Exported Goods?

Export duty that is payable on export of goods is mentioned in the Schedule 2 of the Customs Tariffs Act, 1975. Export duty can be levied in two ways:

  1. A fixed sum based on the weight of the product, this usually includes tea, coffee.
  2. Export duty based on the percentage of the Export Value, this is called the ad valorem.

In addition to the export duty, an export cess may be applied which is stated in the Appendix 1 to Schedule 2.

The updated list of Customs Tariff for the year 2015-2016 can be accessed through the following link: http://www.cbec.gov.in/resources//htdocs-cbec/customs/cs-tariff2015-16/sch2-exptariff.pdf

One thing must be noted and not be confused is that the freely exported goods do not exclusively imply that no money needs to be paid. It simply means that there is no requirement of license or prior authorization for the export.

What is the time period for realization of the Export Proceeds?

By opening a bank account abroad or even by opening an account in India also, which can be a foreign currency account which can hold money in the form of dollars and pounds, an exporter may earn the money. There is a fixed time period to realize and repatriate the entire export proceeds in India as per the Indian Law.

Usually for the exporters who are ordinary in nature, the period is nine months. There is also a provision in which the exporter may receive advance payment. For these cases, the export must be completed within 1 year.

To see further details, the following links can be accessed: https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=9056

Above, we have covered the basic regulations that are associated with the export in India. But we also need to understand the procedure that is followed, which is discussed below:

What is the procedure followed for the Export in India?

The following steps describe the procedure for exports: The following can be accessed in the Handbook of Procedures 2015- 2020 in paragraph 4.78. The following steps are just an overview of the whole Export procedure. To get access through the detailed procedure refer to the following link: http://www.indiantradeportal.in/vs.jsp?lang=0&id=0,25,44

Step 1: To present the Shipping bill or the Bill of Export along with the supported documents

An electronic shipping bill (for the goods that are exported through aircraft and ship vessel) or a bill of export (for the goods that are exported through land) to the Superintendent of Customs and Central Excise or Appraiser. Certain documents can be attached with the Shipping Bill such as an Export invoice, packing list, declaration contract etc.

There are different kinds of goods for different purposes which are represented by different colours for easy identification and are listed below:

After the above step is accomplished, the exporter seeks for the clearance of the goods.

Step 2: To get the goods cleared for export

Custom Officers examine the goods by following certain principles of examination. The Custom Officer usually sees the correctness of documents, duty calculation and the licenses etc.

Step 3: To realize the export proceeds

According to the Foreign Trade Policy for the years 2015-2020, except for export to Iran all exports should be realized in freely convertible currency. Normally exports should be realized within 9 months.

Conclusion

The procedure for exports is rather a complicated process, as the trade policies are regulated after every 5 years and new customs tariffs are applied to different types of goods to which the exporter has to comply with. Keeping a track of the same can be a very tedious task. By following the above article the exporter can get an overview of the Exports law and procedure applicable in India.

Sources:

http://www.archive.india.gov.in/business/taxation/export_procedure.php

http://dgft.gov.in/exim/2000/FTPproc2015-20E.pdf (Handbook of Procedures)

http://dgft.gov.in/exim/2000/Updated_FTP_2015-2020.pdf (Foreign Trade Policy (2015-2020)

 Author- Bhavneet Singh Vohra

Vivekananda Institute of Professional Studies

Tags: export , import , foreign trade , foreign trade policy , laws for export , goods , foreign countries , duties and taxes for export


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