Financial Daily from THE HINDU group of publications
Tuesday, Jan 20, 2004
Financial Daily from THE HINDU group of publications Tuesday, Jan 20, 2004 |
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Industry & Economy
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Foreign Trade Passbook scheme: 12.5% cap on agency commission to stay K.R. Srivats
New Delhi , Jan. 19 IN a setback of sorts for the exporting community, the Government has decided against any review of the existing 12.5 per cent cap on "agency commission" (computed as a percentage of the free-on-board value) for getting the benefits under the Duty Entitlement Passbook (DEPB) scheme. Currently, a large section of exporters secure their contracts through agents who are paid commission based on a certain percentage of the f.o.b. value of the consignments. In the computation of DEPB benefits - which are also granted as a percentage of f.o.b. value - the agency commission component is included. A circular issued by the Director-General of Foreign Trade (DGFT) has now clarified that agency commission would be allowed for the DEPB benefit only if such commission is up to the limit of 12.5 per cent of the f.o.b. value. The industry had recently sought clarification from the DGFT on the maximum permissible limit for payment of agency commission on exports against DEPB licences. The latest DGFT circular has also made it clear that agency commission exceeding this limit should be deducted from the f.o.b. value for granting benefit under DEPB Scheme. This latest stance of the DGFT is consistent with that of the Revenue Department, which had in July last year ruled that agency commission exceeding the 12.5 per cent limit should be deducted from the f.o.b. value for granting export benefits under Drawback/DEPB/Advance Licences/ Duty-Free Replenishment Certificate (DFRC) Schemes.
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