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Rice Exporters Face ₹2000 cr Tax Bill

Customs authorities in Indian have demanded additional duty payments from about 45 major rice exporters due to imposition of 20% export duty potentially disrupting future rice shipments from the country.

The department has issued notices to these exporters for the September 2022 to January 30 2023 period and the tax demand could be about ₹2000 crore said people aware of the developments. Some port authorities are also asking rice exporters to pay customs duty before clearing shipments the people said. ET has seen some of the notices several members of the All India Rice Exporters Association (AIREA) separately confirmed the notices. The association is likely to convey the exporters grievances to the government before seeking legal remedy. India imposed a 20% export duty on white rice in September 2022 and subsequently on parboiled rice in August 20230 to control rising domestic prices. There is no ban currently on basmati rice exports but a minimum export prices of ₹1200/ million tones was prescribed which was later reduced to ₹950/ million tones.

Exporters are required to pay a 20% duty based on free on board (FOB) value of rice and the export duty is passed on to customers as additional cost. Customs authorities however maintain duty needs to be paid on the entire value charged to customers and have asked exporters to pay the differential.

Exporters claim this will amount to “tax on tax”. “There are a large number of such notices where they are computing tax on the transactional value and not on FOB price” a member of AIREA told ET requesting anonymity. While exporters across the country have received notices the problem seems more pronounced at ports in southern India where consignments are held up.

Exporters fear similar tax demands for other agricultural commodities where the government has imposed export duty such as sugar molasses and onion.

“Total payments received from the recipient should be regarded as the value including the tax element and hence the Indian exporters should not be perturbed about the computational aspect in case there is a demand when tax has been paid in F.O.B. value and export duty is recovered from the customers” said Abhishek A Rastogi founder of Rastogi chambers.

S-ET Image Source: Google  

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