Composition fee rules for exports simplified
Jan 18, 2023
New Delhi [India], January 18 : The Directorate General of Foreign Trade (DGFT) has notified the amended rules for the calculation of composition fee for extending export obligation under Advance Authorisation Scheme. The simplification of calculations for the composition fee helps in automation and faster service delivery by making the process more efficient and easier to understand.
According to a Commerce Ministry release, 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 and freight) value of authorisation', is more straightforward and easier to calculate.
The release said this will help automate the entire export obligation extension process with minimal human intervention, further eliminating the risk of errors and misconceptions.
The 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.
Additionally, automation will also 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 shall be notified separately.
The simplification of calculations also helps in the 'Ease of Doing Business' objective by reducing the complexity and making the process more straightforward for exporters.'
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. "This will ultimately lead to trade facilitation and ease of doing business," the release said.
Export Obligation (EO) in the case of Advance Authorisation is the value of export that needs to compulsorily be achieved within a prescribed time period. The EO is usually mentioned in the authorisation issued. After achieving the EO, the entity has to provide evidence of the same.
