Audit Reports
Indirect Tax
Report No. 8 of 2013 - Performance Audit of Deemed Export Drawback Scheme and Reimbursement of Central Sales Tax Union Government, Department of Revenue -Indirect Taxes
Overview
This report contains results of two performance audits - one on 'Deemed Export Drawback Scheme' and another on 'Reimbursement of Central Sales Tax (CST) to EOU7STP1 2/EHTP3 units'. Both the export promotion measures emanate from the Chapters Eight and Six of the Foreign Trade Policy (FTP) under the Foreign Trade (Development and Regulation) Act, 1992 (FTD&R, Act), administered by Department of Commerce (DoC).
DoC has the mandate to facilitate the creation of an enabling environment for accelerated growth of trade, with a view to double India's export of goods and services by 2014, and to double India's share in global trade by 2020. FTP, announced every five years and implemented by Director General of Foreign Trade (DGFT), provides the basic policy framework for translating departmental objectives of promoting Indian exports and import substitution into specific strategies. FTP includes various duty neutralization schemes such as Advance Authorization, Duty Free Import Authorization (DFIA), Duty Entitlement Passbook (DEPB), Deemed Export Duty Drawback (DBK) and Terminal Excise Duty (TED) refund, Export Promotion Capital Goods (EPCG) and other incentive schemes.
In pursuance to the Fiscal Responsibility and Budget Management Act, 2003 (FRBM) the Government started showing estimates of major tax expenditure under the Central Tax System duty from the Receipt Budget 2006-07 onwards. The statements of revenue foregone under the Central Tax System in the Receipts Budgets of the Union Government do not show drawback remissions and deemed export drawback. During the four year period from FY08 to FY11,those concessions (DBK remissions: RS 33,430 crore; deemed export drawback: RS 7,679 crore) constituted 18 per cent of the total tax expenditure of RS 2,25,284 crore.