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DGFT simplifies composition fee for export obligation extension

New Delhi, January 18, 2023 

The previous formula for composition fee was convoluted and difficult to understand, which made the process more tedious and strenuous for exporters 

The directorate general of foreign trade (DGFT) on Wednesday said it has simplified the process of levying composition fee in case of extension of export obligation period under advance authorisation scheme, a move aimed at improving ease of doing business.

An advance authorisation scheme allows duty-free import of inputs, which have to be mandatorily used in products that are required to be exported within a specified time. They are not allowed to sell the products in the domestic market.

A provision of the handbook of procedures of the foreign trade policy (FTP 2015-20) "has been amended to simplify the process of levying composition fee in case of extension of export obligation period under advance authorisation scheme and for higher IT enablement of DGFT", DGFT said in a public notice.

The simplification of calculations for composition fee helps in automation and faster service delivery by making the process more efficient and easier to understand, the commerce ministry said in a statement.

The previous formula for composition fee was convoluted and difficult to understand, which made the process more tedious and strenuous for exporters.

"However, the revised composition fee formula, which is based on a specific rate for different levels of the 'CIF (cost, insurance, freight) value of authorisation', is more straightforward and easier to calculate," it added.

It said that this will help automate the entire export obligation extension process with minimal human intervention, further eliminating the risk of errors and misconceptions.

Automation of the process will reduce the need for manual calculations and paperwork, which will ultimately lead to faster service delivery.

"This will be beneficial to exporters as it will reduce the time and effort required to complete the export obligation extension process," it said, adding that automation will reduce the risk of errors and misconceptions, which will further improve the efficiency of the process.

The process of automation is being taken up under the IT-revamp project of DGFT and would be notified separately.

By simplifying the calculations for composition fee, the DGFT is working towards this objective by making the process more efficient and easier to understand for exporters.

[The Business Standard]