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Updated on 21 Sep 2021  9.00 AM IST | 4 min read

Advance Authorization Scheme (AAS) in Indian Export and Import

Advance Authorization Scheme (ASS) is an incentive provided by government to boost exports from the country. The Director General of Foreign Trade (DGFT) is the body responsible for implementing and overseeing the scheme. One very important thing to mention here is that concerned party availing or willing to avail all the financial benefits and incentives offered by the government need to keep themselves updated about the latest happenings. It is important as being a government run and supported scheme, it is prone to amendment, changes or abolition as per the government decision. Keeping oneself abreast of latest information will help you be on the right track and maximize your benefit from this incentive scheme.

Exporters under Advance authorization Scheme AAS, are allowed to import raw-materials and related inputs under 100% duty exemption schemes. The concerned exporter wishing to benefit from this scheme needs to approach Director General of Foreign Trade (DGFT), which falls under the Ministry of Commerce and Industry, as this is the body responsible for issuing licenses for this scheme. As and when the exporters fulfils all the licensing obligation and the DGFT is satisfied in this matter, the exporter can proceed to sell his products in the domestic market.


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Duty Exemption & Remission Schemes

Duty exemption schemes allow an exporter to import duty free input materials that will go into the making of finished products that will be exported. An Advance Licence is required to avail of this duty exemption scheme. A Duty Remission Scheme consisting of DFRC (Duty Free Replenishment Certificate) and (b) DEPB (Duty Entitlement Passbook Scheme) allows for post export replenishment/ remission of duty on raw materials that have been imported to make finished products intended for exports.

DFRC (Duty Free Replenishment Certificate) permits duty free replenishment of inputs that have been used to make products intended for export. DEPB (Duty Entitlement Passbook Scheme) allows drawback of import charges on the raw materials imported for usage in making finished export products.

Re-import of exported goods under Duty Exemption/ RemissionScheme

Goods exported under Advance Licence/ DFRC/ DEPB can be re-imported in the same form or more or less the same form if the conditions specified by the Department of Revenue from time to time are met by the concerned person.

Value Addition

The value addition is calculated as following:

V.A
A - B
 
= ----------- x 100, where
 
B
 
V.A Value Addition
A
FOB value of the export realised /FOR value of supply received.
B
CIF value of the imported inputs covered by the licence. It also takes into account additional imported materials for which the exemption is being claimed.

An Advance Licence is only issued for duty free input of raw materials which are utilized to make finished products that are intended for export. Also, remember that items like oil, catalysts, fuel, energy which are consumed during the production of items intended for export are also made duty free. Advance Licence also makes provision for duty free import of mandatory spares not exceeding 10 per cent value of the CIF license that are necessary to be supplied along with the finished export products.

SION covers the input and export items to which Advance License are issued. However, they are also issued on Ad hoc basis subject to certain given terms and conditions.


Advance Licence can be issued for:-

Advance Authorization can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer(s) for:

  1. Physical exports (including exports to SEZ); and / or
  2. Intermediate supplies; and /or
  3. supply of stores’ on board of foreign going vessel / aircraft subject to condition that there is specific SION in respect of item(s) supplied.

Please note that Advanced Licence holders are not liable to pay taxes such as basic customs duty, additional customs duty, education, anti-dumping duty and safeguard duty, if any. However, please note that imports as mentioned in paragraph 8.2 (h) & (i) are not liable for exemption of anti-dumping and safeguard duty, if applicable.

Free of Cost Supply by Foreign Buyer

Please note that the facility of Advance Authorization is also available in case a foreign buyer supplies all or some input material free of cost to the exporter. Under such circumstances, notional value of free of cost inputs along with value of other duty-free inputs is taken into consideration for calculation of value addition. In other scenario, where the entire input materials are supplied free of cost by a foreign buyer then the exporter shall also have option to laid down rules and regulations as prescribed by the Department of Revenue.

Advance Authorization for Annual Requirement

Advance Authorization can also be issued for annual requirement. Advance Authorization for annual requirement can be obtained by status certificate holders and all other categories of exporters having past export performance for the two years preceding the current year.

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Due Dates

  • GSTR-7 Summary of Tax Deducted at Source (TDS) and deposited under GST laws

    Sep 10th ,2021
  • GSTR-8 Summary of Tax Collected at Source (TCS) by e-commerce operators under GST laws

    Sep 10th ,2021
  • GSTR 1 for Aug 2021 (turnover more than INR. 1.50 Crore)

    Sep 11th ,2021
  • GSTR-6 Details of Input Tax Credit (ITC) received and distributed by an Input Service Distributor (ISD)

    Sep 13th ,2021
  • GSTR-3B is a summary return to be filed by all taxpayers except those registered under the composition scheme, every month. However, from 1st January 2021, there is also quarterly filing option provided to taxpayers with annual aggregate tunrover of up to Rs.5 crore, opting for the QRMP scheme for Aug Month. (Aggregate turnover exceeding Rs.5 crore in the previous financial year)
     

    Sep 20th ,2021
  • GSTR-3B is a summary return to be filed by all taxpayers except those registered under the composition scheme, every month. However, from 1st January 2021, there is also quarterly filing option provided to taxpayers with annual aggregate tunrover of up to Rs.5 crore, not opting for the QRMP scheme for Aug Month. (Aggregate turnover up to Rs.5 crore in the previous financial year)

    Sep 20th ,2021