We are exporters of services but we do not have any Importer Exporter Code (IEC) number. Our service does not earn any benefit under the Services Export from India Scheme. We do not make any imports. We refer to the Trade Notice no. 13/2015-20 dated January 15, 2016 issued by the Director General of Foreign Trade (DGFT), asking exporters of services to voluntarily obtain IEC and use it while effecting import or export of services, so that trade statistics relating to import/export of services can be captured effectively. We do not understand how we can use the IEC while effecting import or export of services. Can you please guide us?
The Trade Notice is silent on that point. There is no requirement for filing any return. The Trade Notice also does not ask importers of services to take IEC. At best, I can suggest that you may give your IEC number to your bank so that they can keep a track of inward and outward remittances on account of your exports and imports of services. Even so, I wonder how the objective of the Trade Notice -- i.e. collection of data by the Commerce Ministry on imports or exports of services -- will be facilitated.
We manufacture capital goods. We have received our first order for execution of a contract on a turnkey basis. It is a composite contract that involves supply of goods as well as services. We will not only supply capital goods but also do the related civil works, erection, commissioning, etc. in the foreign country. The payment will be on a deferred basis on achieving various milestones. Do we need to take any approval for that?
I request you to go through the revised Memorandum of Instructions on Project and Service Exports issued by the Reserve Bank of India and get your project approved by an Authorised Dealer or the Exim Bank. You may refer to AP (DIR) Circular no. 39 dated January 14, 2016 issued by RBI.
We are a small private limited company. We intend to set up a wholly-owned subsidiary abroad. Supposing we receive dividend from the subsidiary in any year, can we get any relief from dividend tax on the dividend we pay to our shareholders in the same financial year?
First, please take note that the dividend you receive from your foreign subsidiary is taxable under section 115BBD of the Income Tax Act, 1961. Section 115-O (1A) provides that the amount of dividend you pay to your shareholders, on which tax is to be payable by you under section 115-O, shall be reduced by the dividend received by you from your subsidiary, where such a subsidiary is a foreign company and tax is payable by you, under section 115BBD, on such dividend received.
Can we use the duty credit scrips issued under chapter 3 of the Foreign Trade Policy for duty payment on goods cleared from bonded warehouses?
Yes. Please see CBEC Circular no. 50/2011-Cus dated November 9, 2011.
