New Delhi, December 5, 2017
India may release imported items without any upfront duty payment as part of a revamp of the Customs framework to speed up movement of goods across borders, which can currently take more than a week. Such a move would provide a massive boost, industry said.
The upcoming budget, the first after the rollout of the goods and services tax (GST), is likely to include several measures aimed at relaxing the Customs regime for businesses. Other measures could include allowing traders to know their tax liability in advance even for existing transactions.
“A number of changes could be taken up on priority basis in the upcoming (February) budget,” said a senior government official.
The government is also working on an overhaul of the Customs Act but some key measures could be frontloaded in the budget, another official said.
Goods are currently released after assessment and payment of duty. If this system is reversed, goods will be released first with assessment of duty liability taking place subsequently.
“Release of goods without determination of duty would be hugely positive for the industry,” said Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO). “Of the 16% logistics cost in India, detention and demurrage contributes as much as 4%.”
As for advance rulings, he said this will bring about predictability for businesses but pointed out that e-filing should be allowed and applications dealt with speedily. India is ranked 146 out of 190 countries on the World Bank’s ease of doing business ranking on the ‘trading across borders’ measure and the government feels this can be improved substantially to lift the overall rank. India improved its overall rank to 100 this year from 130 last year.
Border Compliance Takes 267 Hours
Prime Minister Narendra Modi wants India to break into the top 50.
In India, border compliance takes 267 hours (more than 11 days) for imports against 8.7 hours for OECD countries and instant clearance in as many as 21 countries.
That translates into a cost of $536 per consignment in India compared with $111.6 in OECD countries. “Key areas of concerns for a trader are assessment, clearance of goods, refunds and disputes, addressable in a time-bound transparent manner through IT-based tools, knowledge partnerships,” said Rahul Shukla, executive director, indirect tax, PwC. “Simpler and predictable rules will go a long way to improve the trade outlook and help India’s position of trade facilitator globally.”
Deloitte partner MS Mani said businesses are eager for online, real-time, advance rulings on classification issues, among the key reasons behind Customs disputes.
[The Economic Times]