13 April 2017
Dear experts, Am an exporter of garments, in the small scale sector, whose main source of income is duty drawback reimbursed by customs. We are now booking orders
for august shipments. My query is will we continue to receive drawback at earlier rates? secondly do exporters fall in exempt category? In short
do i have to factor in duties that we might pay on fabrics etc or do we get input credit on exporting the garments? Kamal sakhrani.
13 April 2017
Drawback rates are likely to continue. However in GST regime, the incidence and breadth of tax shall expand a lot. In such situation relying on drawback rates may not be very beneficial. It shall be useful to take refund of IGST paid on export shipments and taking drawback only on custom portion. It may increase procedural work a bit more but financially it shall be more prudent.
14 April 2017
Mr. Rajesh thanks for your reply. Presently we get 10% drawback on fob value of exports, that is for FOB Rs100/ drawback is rs10/. From your reply can i conclude that if we take a combo, as suggested by you, of refund of IGST paid and customs portion of Drawback we are likely to get 10% ++? this is an important point for me as i would like to know if earlier I was selling a garment for $5/ can i continue to book at the same price without loss of revenue?
15 April 2017
Selling price is something you command. It does not depend upon as to how much drawback you get or what IGST refund you will get. So I cannot say anything on price. Regarding the other question, you need to study your costing structure, input credit that you could have taken, procurement etc. and only after you can come to a conclusion as to what practice is good for you. I suggest that such exercises should be done every 2-3 years.
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