The DGFT has announced rule changes to simplify the calculation of the “composition fee” for the extension of export obligations under the “Advance Authorization Scheme (AES).” These rule changes are detailed in Section 4.42 of the Handbook of Procedures (2015–20).
The initiative taken by the Directorate General of Foreign Trade (DGFT) to simplify composition fee calculations will undoubtedly aid in automating processes and delivering services more quickly due to accelerated processing.
The previous composition fee formula was overly complicated and difficult to understand, making the process more difficult and time-consuming for exporters. The revised composition fee formula, on the other hand, which is based on a specific rate for different levels of the “CIF value of authorization,” is simpler and easier to calculate than the previous formula.
This will help to automate the entire process of extending the export obligation with minimal human intervention, reducing the risk of errors and misunderstandings.
As a result of automating the process, there will be less need for manual calculations and paperwork, which will result in faster service delivery. As a result, the amount of time and effort required to complete the Export Obligation Extension process will be reduced, which is good news for businesses that export goods.
Furthermore, the process will be more efficient as a result of the reduction in the likelihood of errors and misunderstandings caused by automation implementation. The automation process is currently being worked on as part of the DGFT’s IT-revamp project, and it will be announced separately in due course. The “ease of doing business” goal can also be aided by simplifying calculations, which reduces the complexity of the process and makes it easier for exporters to follow.
The DGFT is working toward this goal by streamlining the composition fee calculations. This will make the process more efficient and easier to understand for exporters. In the end, this will result in trade facilitation and ease of doing business.
DGFT Public Notice 52/2015-20 dt. 18/01/2023: DGFT simplifies Composition Fee Calculation Rules for Export Obligation Extension under the Advance Authorization Scheme (AES)
Due to a drop in export shipments, the DGFT has simplified the composition fee levy to assist exporters in meeting their commitments. The composition fee is levied if the exporter fails to export the product in a timely manner after importing duty-free inputs. If the export obligation (EO) period for authorisations is less than half of the stipulated/ approved period or is for a one-time six-month extension, the fee is limited to Rs 15,000. An extension of the EO for another 6 months will cost up to Rs 30,000. The DGFT’s reduction, capping, and rationalisation of the composition fee will undoubtedly lower exporters’ costs and facilitate additional exports.