Daily Current Affairs : 8-June-2024
The Central Board of Indirect Taxes and Customs (CBIC) has introduced an important change for exporters in India. Starting from June 5th, 2024, duty drawback amounts will be directly dispensed to exporters’ bank accounts through the Public Finance Management System (PFMS). This move is aimed at simplifying the refund process and enhancing efficiency in the export industry.
What is Duty Drawback?
Duty drawback is a refund mechanism under Section 75 of the Customs Act, 1962. It allows exporters to claim a refund of customs duties paid on imported goods or excisable materials used in the production of export goods. Essentially, the duty drawback system helps exporters recover a part of the costs incurred when importing raw materials or components to make goods for export.
Key Points About Duty Drawbacks:
- Refunds Customs Duties: Duty drawback refunds the customs duty paid on imported goods used in the export process.
- Helps Exporters: It reduces the financial burden on exporters, making their products more competitive in international markets.
- Supports the Supply Chain: The refund is available for materials used in manufacturing export goods, thus benefiting the entire value chain.
The New Electronic Disbursal System
The new initiative introduced by CBIC will see duty drawback amounts credited directly to exporters’ bank accounts using the Public Finance Management System (PFMS). This step is part of the government’s broader goal to digitize and streamline the customs and export process.
Benefits of Electronic Disbursal:
- Faster Processing: The electronic system will speed up the disbursal of refunds, reducing delays and waiting times for exporters.
- Reduced Manual Intervention: By moving to an automated system, there will be fewer chances of human error and less paperwork involved.
- Greater Transparency: The system will make the process more transparent, allowing exporters to track the status of their refunds easily.
- Improved Efficiency: The overall process of claiming and receiving duty drawbacks will become more efficient and smoother, saving time for both exporters and government officials.
Alignment with Trade Facilitation Goals
This shift to electronic disbursal is in line with India’s commitment to modernizing customs procedures and facilitating smoother trade operations. It also aligns with the objectives of the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA), which aims to reduce barriers to international trade through simplified customs procedures and improved transparency.
Important Points:
CBIC’s New Initiative: Starting June 5th, 2024, CBIC will disburse duty drawback amounts directly to exporters’ bank accounts via the Public Finance Management System (PFMS).
What is Duty Drawback?:
- Duty drawback is a refund of customs duties paid on imported goods or excisable materials used in the production of export goods.
- Helps exporters recover part of the costs incurred in importing raw materials or components for export production.
Key Benefits of Duty Drawback:
- Refunds Customs Duties: Refunds duties paid on imported materials used in manufacturing export goods.
- Helps Exporters: Reduces financial burden, making export products more competitive in global markets.
- Supports the Supply Chain: Refunds apply to materials used in the entire export production process.
New Electronic Disbursal System:
- Duty drawbacks will be credited directly to exporters’ bank accounts using the PFMS.
- Part of the government’s initiative to digitize and streamline customs procedures.
Advantages of the New System:
- Faster Processing: Speeds up refund disbursal, reducing delays.
- Reduced Manual Intervention: Fewer chances of human error and less paperwork.
- Greater Transparency: Exporters can easily track the status of their refunds.
- Improved Efficiency: Simplifies the process, saving time for both exporters and government officials.
Alignment with Global Trade Goals:
- The move supports India’s commitment to modernizing customs processes and aligns with the WTO’s Trade Facilitation Agreement (TFA) to reduce trade barriers and improve transparency.
Why In News
Starting from June 5th, 2024, the Central Board of Indirect Taxes and Customs (CBIC) has initiated the electronic disbursal of duty drawback amounts directly to exporters’ bank accounts through the Public Finance Management System (PFMS), streamlining the refund process and ensuring faster, more transparent transactions for businesses engaged in international trade.
MCQs about Simplifying Duty Drawbacks
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What is the primary purpose of the duty drawback system?
A. To reduce taxes on all goods imported into India
B. To refund customs duties on imported goods used in export production
C. To provide financial assistance to Indian exporters
D. To support domestic manufacturing for local markets
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What major change did CBIC introduce on June 5th, 2024, regarding duty drawbacks?
A. Exporters will now be required to submit physical documents to claim duty drawbacks.
B. Duty drawback refunds will be issued via checks instead of electronic transfer.
C. Duty drawback amounts will be directly credited to exporters’ bank accounts through PFMS.
D. Exporters will no longer receive any duty drawback refunds.
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Which of the following is NOT a benefit of the new electronic disbursal system introduced by CBIC?
A. Faster processing of duty drawback refunds
B. Increased transparency in the refund process
C. More paperwork for exporters
D. Reduced manual intervention and human error
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How does the new duty drawback disbursal system align with global trade goals?
A. By increasing the cost of exports for Indian businesses
B. By reducing international trade barriers and improving transparency
C. By making Indian exports more difficult to track
D. By encouraging non-digital customs processes
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