A Duty Credit Scrips (DCS) is the License issued by the Indian Government under various incentive schemes including Merchandise exports from India scheme (MEIS) and service exports from India scheme (SEIS), both the schemes launched by the Government under foreign trade policy 2015-20 and in effect from 1st April 2015. Under MEIS Scheme the benefits can be availed 2% to 5% of the FOB value of goods exports it may go up to 7% while in SEIS Scheme benefits ranges are 5% to 7% of the net foreign exchange earned on the notified services.
Rewards under the MEIS/SEIS scheme:-
Duty Credit Scrips can be obtained under the incentive schemes, which are valid for 24 months from date of issue. Which are transferable in nature and can be sold in the market at a discounted rate, Benefits under these scrips are not obtained in the form of cash.
These schemes were launched by the Government keeping in mind to promote the service and goods exports from the country which will lead to the generation of employment.
Use of Duty Credit Scrip:-
Duty Credit Scrip is also known as License, these are valid for 24 months from issue date and can be used to waive off the import duties, these are as good as cash in hand.
These are used in payment of following –
- Basic Custom Duties
- Additional Custom Duties
- Safeguard duties
- Anti Dumping duties
These scrips can not be used for the GST compensation cess.
In normal condition the validity of the scrip can not be extended but if an applicant gives special.
How a Duty Credit Scrip obtained under SEIS Scheme works:-
It helps service exporters to limit their cash flow in custom duty payment and free up cash for working capital for service exporters which is much needed to sustain and maintain the firm.
Service exporters can be issued scrips of 5% to 7% depending on the service category.
Consider an exporter received an order of export and wanted to use the imported inputs to start the production and exporters need to pay the customs duty on the import of inputs by eating into their working capital, In this case having Duty credit scrip or license can take the burden off from exporters. It the service exporters have License of Rs 3 Lakh and import duty is 3.5 Lakh on the import of inputs in this case 3 Lakh duty can be waived off with the help of DSC or license.
Way to obtain the Duty Credit Scrips:-
- To Obtain Duty Credit Scrip Online application shall be filed on the DGFT website with the help of DGFT Digital Signature Certificate which is specifically made for the incentive purpose.
- DGFT issue the license after reviewing it and Registration of License shall be done to check it’s genuineness.
- These Duty Credit Scrips obtained from DGFT can be used to set off the custom duties at the port.
- If the license holder does not wish to sell the license he can transfer it to the buyer who needs to pay the customs duties.
- Depending on the service category it can be issued having the rate of 5% to 7% on the net foreign exchange earned on the notified services.
Union Cabinet Approved RoDTEP Scheme (Remission of Duties and taxes on the Export Products) which will replace the existing MEIS scheme and RoSCTL Scheme in a phased manner.
The benefits under RoDTEP Scheme will also be given in the form of Duty Credit Scrips which can be saleable in the market.
Selling of Duty Credit Scrips:-
Under Incentive schemes, these are issued by the DGFT and can be used at a custom port in payment of various duties.
The license holder can find the buyer directly or he can go through an agent who helps to get the buyer.
Holder needs to transfer the license online and offline –
In offline transfer – The original license can be transferred by giving original license plus bill of supply and transfer letter by doing bank verification from the bank where the current account of the company exists.
In online transfer – License can be transferred online on the DGFT website with the help of digital signature and IEC copy.