Exemption on Import of Covid Relief Items

Exemption on Import of Covid Relief items Taxmann’s Indirect Tax Research & Advisory May – 2021

Exemption on Import of Covid Relief items.

Basic Customs Duty

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Unconditional exemption of Basic Custom Duty (‘BCD’) has been granted on import of Covid-19 relief materials

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For few materials (such as Beta Cyclodextrin, etc.) procedure laid down under Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. are required to be followed

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Exemption would be available in all cases (i.e., imported after purchased or Import of donated items)

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Details of Covid relief items and time period up to which exemption is available are mentioned in Annexure 1 & Annexure 2 of this document

Notification No. 27/2021-Customs, dated 20th April, 2021 & Notification No. 28/2021-Customs, dated 24th April, 2021

Health Cess

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Health Cess has also been exempted similar to BCD as above on Goods mentioned in Annexure 2 of this document

Notification No. 28/2021-Customs, dated 24th April, 2021

IGST

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IGST Exemption is available to State Government or, any entity, relief agency or statutory body authorized by the State Government for Import of donated items when distributed on free of cost basis in India for Covid relief

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Exemption would be available subject to following the procedure notified in this regard Ad hoc Exemption Order No. 4/2021-Customs, Dated 3rd May, 2021 2

Procedure for claiming IGST exemption.

Eligible Importer Step 2 Issuance of Certificate by Nodal Authority

Step 3

Step 1

Submission of Certificate to Customs Authorities

Applying for a Certificate

Nodal Authority

Step 4 Post Import Compliance

AC/DC Custom 3

Procedure for claiming IGST exemption.

Step 1

Applying for a Certificate

• The importer shall before clearance of goods from Customs is required a certificate from the nodal authorities (appointed by the State Government) that goods are meant for free distribution for Covid relief in India • In this regard, the importer may file a declaration to the Nodal Authorities for obtaining the said certificate. List of Nodal authorities prescribed so far are attached as Annexure 4 of this document • Draft declaration which can be submitted to Nodal Authorities is attached as Annexure 3 of this document

Step 2

Grant of Certificate

• The Nodal Authority would grant certificate to the importer

Step 3

Submission of Certificate

• While claiming the exemption of IGST, the importer would be required to submit the said certificate to the AC/DC of the Customs 4

Procedure for claiming IGST exemption.

Step 4

Post Import Compliance

• Within a period of 6 months from the date of importation (or within such extended period not exceeding 9 months), the importer is required to produce to the DC/AC of Customs a simple statement containing details of goods imported and distributed free of cost • This statement shall be certified by the said Nodal Authority of the State Government

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TAXMANN’s Comments

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TAXMANN’s Comments.

The exemption shall be available if the impugned goods are imported into India on free of cost basis (i.e., donated by foreign agencies, Governments etc.). If the authorized entities/relief agencies are importing the said relief material after purchase, then IGST at the rate 12% shall be applicable (i.e., exemption shall not be available)

Exemption would not be available to the entities which are procuring the said relief items and importing to India for distribution to their employees on free of cost basis

It is recommended that the Government should also extend this exemption to the scenarios where such goods are purchased from outside India and imported for free distribution in India

Further, details of all the State Nodal agencies are not prescribed as of now. The Revenue Secretary has written letters to Chief Secretaries for creation of State/UT Nodal Agencies for taking immediate actions in this regard. It is recommended that the Nodal Agencies should be formed on priority basis and its details should be publicized for smooth and immediate clearance of the Covid-19 relief material

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© Privileged and Confidential | Draft for discussion

Annexures

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Annexure - 1. .

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Annexure - 2. .

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Annexure - 2. .

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Annexure - 3 | Draft Declaration. .

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Annexure - 4 |List of State Nodal Authorities. .

© Privileged and Confidential | Draft for discussion

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Annexure - 4 | List of State Nodal Authorities. .

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Annexure - 4 | List of State Nodal Authorities. .

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Thank You

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