How to Claim 5% Cashback on Export of Goods from India

Introduction

It sounds crazy that one can claim 5% Cashback on exporting goods from India but it is not. We are serious. The Cashback or the reward is provided by the government of India on exporting goods from India.

The government provides this benefit to incentivize the exports and to help the exporter who incurs the extra cost due to infrastructure and other issues.

The schemes are provided by the government under Chapter 3 of Foreign Trade Policy in India. The chapter is called Exports from India Scheme.

There are two types of schemes available for exporters:

1. Merchandise Exports from India Scheme (MEIS)
2. Services Export from India Scheme (SEIS)

In this article, we will talk about the Merchandise Exports from India Scheme (MEIS). You can also see this from this video as well.

What are Merchandise Exports from India Scheme (MEIS)?

Merchandise exports from India scheme (MEIS) is an initiative of the government of India to encourage the exports in India and further to offset the extra cost incurred by the exporters due to inefficient infrastructure and associated cost.

Who all are entitled to avail this scheme?

Not all goods are entitled to avail benefit under this scheme. Export of only notified goods is allowed. The notified goods are listed in Appendix 3B along with reward rate.

The basis of calculation of reward would be realised on FOB value of exports in free foreign exchange or FOB value of exports.

Further, exporting the goods through courier or foreign post using e-commerce is also eligible for this scheme.

Basis of Reward rate

The basis of reward rate depends on upon two factors:

• Product Exported: As said, the exports of notified goods are only eligible under this scheme. The further rate of reward is also depends upon product to product. This rate of reward against each eligible product can be checked from the link here: Click here.

• Country Exported: Once you read the list of exported product, then you will see that rates also depend upon the country exported. The lists of countries are divided into three groups. Country group A, country group B, country group C.

The categories of countries can be referred from the link: Check group companies

How to apply for benefit under MEIS

An application can be filed online using the digital signatures in form ANF 3A. Make sure; you apply for the benefit while filing your shipping bill.

While fling the shipping bill at the time of export, the declaration of intent is also to be filed. Once the letter of intent is filed, only then the shipping bill is electronically transferred from customs authority to DGFT system.

How reward on export is granted to exporters

Once, the application is approved by the DGFT; the reward is granted to exporters by way of freely transferable duty credit strips. These scrips can be used against the payment of following taxes:

1. Custom duties
2. Excise duties
3. Service tax.

Further, in case you are not eligible to pay any taxes, then you can easily sell these strips for cash.

How documents are submitted to claim the benefit

Submission of documents depends on upon the nature of filing; let us understand this in detail:

1. Filling through EDI Ports: If an application is filed through EDI ports, then there is no need to submit any hard copies of the documents. Further proof of lading shall also be filed online.
2. Filing through Non-EDI Ports: If the application is filed through non-EDI ports then the applicant shall need to submit the export promotion copy of non-EDI shipping bills.

Further, here are some common points for each of the cases above:

• If export is made from different ports, then the application shall be made to each port of export separately.
• Once scrip is granted, it should be first registered with the port from where export was made.
• After registration, the scrips can be used at any port in India.
• The documents which are not required to be filed in original shall be retained by the exporter for at least three years.
• If reward under MEIS is available to all the countries, then proof of lading shall not be required to be submitted for claiming the reward.

Conclusion

We have tried to simplify the export benefits scheme to make you understand them properly.

Know more about the Service Exports from India Scheme (SEIS).