DGFT enables Input Tax Credit on GST paid on materials under Advance Authorization Scheme

The Directorate General of Foreign Trade (DGFT) has enabled Input Tax Credit on Goods and Services Tax (GST) paid on materials under the Advance Authorization Scheme by amending the Handbook of Procedures, 2023 via issuing a public notification.

The transfer of any duty-free material is imported or procured for manufacturing purposes against Advance Authorization from one unit of a company to another unit, then shall be done with prior intimation to the jurisdictional Customs Authority. Now, ITC has been enabled on such duty-free material on which GST has been paid.

The official notification stated:

In the exercise of powers conferred under Paragraphs 1.03 and 2.04 of the Foreign Trade Policy, 2023, as amended from time to time, the Director General of Foreign Trade hereby makes the following amendment in the provision of Para 4.10 (i) of the Handbook of Procedures 2023.

Existing para 4.10 (i):

Transfer of any duty-free material imported or procured against Advance Authorization from one unit of a company to another unit for manufacturing purposes shall be done with prior intimation to the jurisdictional Customs Authority. Benefit of Input Tax Credit shall not be claimed on such transferred input.

Amended para 4.10 (i):

Transfer of any duty-free material imported or procured against Advance Authorization from one unit of a company to another unit for manufacturing purposes shall be done with prior intimation to the jurisdictional Customs Authority. In case of transfer of duty-free imported or indigenously procured materials, on which GST has been paid, between the units located in the same or different States, the availment of Input Tax Credit shall be governed as per the provisions of the GST law and the rules made thereunder.

For official notification download the pdf given below: