India yesterday capped export incentives under the Merchant Export from India Scheme (MEIS) at ₹2 crore per exporter on outbound shipments between September 1 to December 31 this year. The move follows the department of revenue asking the commerce ministry to review MEIS coverage so that its fiscal benefits can be reduced to ₹9,000 crore in this fiscal.
"A limit on total reward under MEIS has been imposed so that for exports made in the period September 1, 2020 to December 31, 2020, the total reward which can be claimed by an IEC (Import Export Code) holder does not exceed the ceiling of ₹2 crore," the Directorate General of Foreign Trade (DGFT) said in a notification.India yesterday capped export incentives under the Merchant Export from India Scheme (MEIS) at ₹2 crore per exporter on outbound shipments between September 1 to December 31 this year. The move follows the department of revenue asking the commerce ministry to review MEIS coverage so that its fiscal benefits can be reduced to ₹9,000 crore in this fiscal.#
Further, it has been notified that any IEC holder who has not made any exports for a period a year preceding September 1 or any new IECs obtained on or after the date of publication of this notification would not be eligible for submitting any claim under this scheme.
MEIS will be withdrawn with effect from January 1 next year, DGFT said.
"The ceiling will be subject to further downward revision to ensure that the total claim under MEIS for the period (September 1 to December 31, 2020) does not exceed the prescribed allocation by the government, which is ₹5,000 crore," it said.
There will be no change in the coverage of MEIS and the applicable rates.
Under MEIS, the government provides duty benefits depending on product and country. Rewards under the scheme are payable as a percentage of realised free-on-board value and MEIS duty credit scrip can be transferred or used for payment of a number of duties, including the basic customs duty.
The MEIS scheme, introduced in April 2015, will be wound up by December 31, and the government has already announced the Remission of Duty or Taxes on Export Products (RoDTEP) scheme to replace MEIS. Under RoDTEP, the remission of embedded taxes and other levies on exports shall be allowed.
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