Foreign Trade Policy

Indirect Tax Law

An indirect tax (such as sales tax, per unit tax, value added tax (VAT), or goods and services tax (GST ), excise, consumption tax, tariff) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer).

Indirect taxes are not directly paid by the assesses to the government authorities. These are levied on goods and services and collected by intermediaries (those who sell goods or offer services)

GST

GST

As a significant step towards the reform of indirect taxation in India, the Central Government has introduced the Goods and Service Tax (GST). GST is a comprehensive indirect tax on the manufacture, sale and consumption of goods and services throughout India and will subsume many indirect taxes levied by the Central and State Governments. GST will be implemented through Central GST (CGST), Integrated GST (IGST) and State GST (SGST).

Four laws (IGST, CGST, UTGST & GST (Compensation to the States), Act) have received President assent. All the States & UT expected to pass State GST Act, by end of May 2017. GST law is expected to take effect from July 1, 2017.

GST is the biggest tax-related reform in the country bringing uniformity in the taxation structure and eliminating the cascading of taxes that was levied in the past. The GST Council meets from time to time to revise the GST rates for various products.

 GST stands for Goods and Services Tax. It is classified into three types:

CGST –Central GST

SGST –State GST

IGST –Integrated GST

GST Tax Rates on some common items:

RatesProducts
5%Household necessities such as edible oil, sugar, spices, tea, and coffee (except instant) are included. Coal ,Mishti/Mithai (Indian Sweets) and Life-saving drugs are also covered under this GST slab.
12%This includes computers and processed food
18%Hair oil, toothpaste and soaps, capital goods and industrial
intermediaries are covered in this slab
28%Luxury items such as small cars, consumer durables like AC and Refrigerators, premium cars, cigarettes and aerated drinks , High-end motorcycles  are included here.

 

CUSTOM

Custom duties are levied on nearly all goods that are imported into the nation. While export duties are levied on goods as specified by the Second Schedule, import duties are not levied on certain items like fertilizers, food grains, lifesaving drugs etc. Custom duty can be classified into the following types:

  • Basic Customs Duty: This duty is imposed on the value of goods at a specified rate as it is fixed on an ad-valorem basis. After being amended time and again, it is currently regulated by the Customs Tariff Act, 1975. The Central Government, however, holds the rights to exempt specific goods from this tax.
  • Countervailing Duty: CVD or Additional Customs Duty is levied on imported goods that fall under Section 3 of the Customs Tariff Act of 1975. It is the same as the Central Excise Duty which is levied on similar goods that are produced in India.
  • Education Cess: The cess used to be levied at 2% and an additional 1% of the aggregate of customs duties.
  • Protective Duty: This duty is imposed in order to shield the domestic industry against the imports at rates that are recommended by the Tariff Commissioner.
  • Safeguard Duty: As the name suggests, this duty serves as a means of safeguarding the rise in imports. Sometimes, if the government feels that a rise in imports can damage the existing domestic industry, it may levy this duty.
  • Anti-Dumping Duty: This duty is based on the dumping margin, i.e. the difference between the export price and the normal price. It is only imposed when the goods that are imported are below the fair market price.
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Foreign Trade Policy

Nirmala Sitharaman, the Minister of State (Independent Charge) Commerce and Industry India have introduced the new five Year Foreign Trade Policy, 2015-2020 and 2015-2021, and soon the 2021-2026 policy which will provide a framework for increasing exports of goods and services as well as generation of employment and increasing value addition in the country. The modus operandi of the Government is to support both the Manufacturing and Services Sectors with special emphasis on improving The Ease of Doing Business keeping in view the “Make in India” vision of our Prime Minister Mr. Narendra Modi.

Which Authority deals with Foreign Trade Policy in India?

Directorate General of Foreign Trade (DGFT) deals with case laws that are related to Foreign Trade Policy in India.

Our services

  • Examination of a policy framework for imports into and exports out of India in terms of restrictions and conditions to be followed depending upon the nature of the product to be imported and/ or exported such as obtaining certificates from the designated authorities and intimations that are supposed to be provided, etc.
  • Preparing applications for the clients and obtaining the requisite permissions and licenses as well as duty credit scrips as per the provisions of the policy.
  • Advice on schemes such as Advance Authorization, Export Promotion Capital Goods, Duty Drawbacks, and Deemed Export, etc.
  • Advice on concessional duty rates available on import of specified goods from various countries with whom India has entered into a Free Trade Agreement (FTA) thereby leading to substantial savings.
  • Advice on the implications arising out of shifting entire operations to a bonded warehouse considering the overall objective of the business. Advice includes the setting up of business in Free Trade Warehousing Zones (FTWZs), Special Economic Zones (SEZs), Software Technology Parks of India (STPIs), and Export Oriented Units (EOUs).
  • Analysis of comparative benefits and assistance in setting up of STP/ EOU/ SEZ units and carrying out operations in such units.
  • Redemption of licenses and authorizations from Directorate General of Foreign Trade (DGFT) and releasing of bonds and bank guarantees from relevant customs authorities along with advice towards the fulfillment of Export Obligation (EO) and other procedural aspects of the policy.

Foreign Exchange Management Act

Foreign Exchange Management Act is the process of limiting a company’s exposure to foreign currency fluctuations. In most cases, this is done by companies that engage in foreign trade. Foreign exchange, or forex, is the conversion of one country’s currency into another. In other words, a currency’s value can be pegged to another country’s currency, such as the U.S. dollar, or even to a basket of currencies. 1 A country’s currency value may also be set by the country’s government.

Collaboration Team Meeting Communication with Business Team Working Together
  1. Investopedia defines “Foreign Exchange (forex or FX) as the trading of one currency for another.”
  2. Foreign Exchange (forex or FX) is a global market for exchanging national currencies with one another. 
  3. The Exchange venues comprise the largest securities market in the world by nominal value, with trillions of dollars changing hands each day.
  4. Foreign exchange trading utilizes currency pairs, priced in terms of one versus the other.
  5. Forwards and futures are another way to participate in the forex market.

The Foreign Exchange Management Act, 1999 (FEMA) is an Act of the Parliament of India “to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India”.

 

FEMA (Foreign Exchange Management Act) is appropriate to the entire of India. And pertinent to the offices and workplaces situated outside India. The administrative center of FEMA is arranged in New Delhi. It is known as Enforcement Directorate.

Foreign Exchange laws / Foreign Exchange Management Act are /is one of the most stringent law of the country and are /is subject to changes at rapid pace. As an organization, it is necessary to make sure that all your transactions related to foreign exchanges are in compliance with law and if not, necessary precautionary measures shall be undertaken to rectify the same.

Please contact the best lawyers in Delhi for all transactions, inbound & outbound,  undertaken during the period under scrutiny from the point of compliance with foreign exchange laws and provides required FEMA  Advisory including remedial measures, in case of any deficiency.

Our FEMA Attorneys and Solicitor’s Legal services include Appeals and representation before the Court FEMA and ED in the case of gross violation of the provisions of the FEMA and in terms of money laundering.

We provide Legal Supports in the following: 

  • RBI for Compounding Legal Assistance
  • ED in Prosecution Matter Litigation Services
  • FEMA Tribunals Appeals & Representation
  • ED Legal Guidance & Litigation
  • Appeals Before Tribunal

Direct Tax Law

The tax structure in India is divided into direct and indirect taxes. While direct taxes are levied on taxable income earned by individuals and corporate entities, the burden to deposit taxes is on the assessees themselves. INDIAN TAXATION SYSTEM The tax structure in India is divided into direct and indirect taxes. The implementation of both taxes differs. DIRECT TAXES are levied on taxable income earned by individuals and corporate entities, the burden to deposit taxes is on the assessee themselves. INDIRECT TAXES are levied on the sale and provision of goods and services respectively and the burden to collect and deposit taxes is on the sellers instead of the assesse directly.
  • A. Income Tax Act:- An income tax is a tax that governments impose on income generated by businesses and individuals within their jurisdiction. By law, taxpayers must file an income tax return annually to determine their tax obligations. Income taxes are a source of revenue for governments.
  • B. Wealth Tax Act:- The Wealth Tax Act was enacted in 1951 and is responsible for the taxation related to the net wealth of an individual, a company or a Hindu Unified Family. The simplest calculation of wealth tax was that if the net wealth exceeded Rs. 30 lakhs, then 1% of the amount that exceeded Rs. 30 lakhs was payable as tax. It was abolished in the budget announced in 2015. It has since been replaced with a surcharge of 12% on individuals that earn more than Rs. 1 crore per annum. It is also applicable to companies that have a revenue of over Rs. 10 crores per annum. The new guidelines drastically increased the amount the government would collect in taxes as opposed the amount they would collect through the wealth tax.
  • C. Gift Tax Act:- The Gift Tax Act came into existence in 1958 and stated that if an individual received gifts, monetary or valuables, as gifts, a tax was to be to be paid on such gifts. The tax on such gifts was maintained at 30% but it was abolished in 1998. Initially if a gift was given, and it was something like property, jewellery, shares etc. it was taxable. According to the new rules gifts given by family members like brothers, sister, parents, spouse, aunts and uncles are not taxable. Even gifts given to you by the local authorities is exempt from this tax. How the tax works now is that if someone, other than the exempt entities, gifts you anything that exceeds a value of Rs. 50,000 then the entire gift amount is taxable.
In India, income tax is levied on individual taxpayers on the basis of a slab system where different tax rates have been prescribed for different slabs and such tax rates keep increasing with an increase in the income slab. Such tax slabs tend to undergo a change during every budget.

1. INCOME TAX SLAB RATE FOR INDIVIDUALS

In India, income tax is levied on individual taxpayers on the basis of a slab system where different tax rates have been prescribed for different slabs and such tax rates keep increasing with an increase in the income slab. Such tax slabs tend to undergo a change during every budget.

1. INCOME TAX SLAB RATE FOR INDIVIDUALS

1.1 Individual(resident or non-resident), who is of the age of less than 60 years on the last day of the relevant previous year:

Taxable income

Tax Rate

1.2 Resident senior citizen, i.e., every individual, being a resident in India, who is of the age of 60 years or more but less than 80 years at any time during the previous year:

Taxable income

Tax Rate

1.3 Resident super senior citizen, i.e., every individual, being a resident in India, who is of the age of 80 years or more at any time during the previous year:

Taxable income

Tax Rate

Plus:

Surcharge: 10% of tax where total income exceeds Rs. 50 lakh

15% of tax where total income exceeds Rs. 1 crore

Education cess: 3% of tax plus surcharge

 

2. Income tax rates for HUF/AOP?BOI/Any other artificial juridical person:

Taxable income

Tax Rate

3. Tax slab rate for Domestic Company:

A domestic company is taxable at 30%. However, tax rate is 25% if turnover or gross receipt of the company does not exceed Rs. 50 crore.

 

4. TAX RATES FOR FOREIGN COMPANY:

A foreign company is taxable at 40%

 

SURCHARGE for Individual/HUF/ AOP/ BOI/ Artificial Judicial Person

Net Income for Individual/HUF/ AOP/ BOI/ Artificial Judicial Person exceeds 50 Lacs But doesn’t exceeds 1 Cr. = Rate of Surcharge @ 10%

Net Income for Individual/HUF/ AOP/ BOI/ Artificial Judicial Person exceeds 1 Cr. But doesn’t exceeds 2 Cr. = Rate of Surcharge @ 15%

Net Income for Individual/HUF/ AOP/ BOI/ Artificial Judicial Person exceeds 2 Cr. But doesn’t exceeds 5 Cr. = Rate of Surcharge @ 25%

Net Income for Individual/HUF/ AOP/ BOI/ Artificial Judicial Person exceeds 5 Cr. = Rate of Surcharge @ 37%

 

SURCHARGE for Firm/LLP/Local authorities/Co-operative Society

Net Income exceeds 1 Cr. = Rate of Surcharge @ 12%

 

SURCHARGE for Domestic Company

Net Income exceeds 1 Cr. But doesn’t exceeds 10 Cr. = Rate of Surcharge @ 7%

Net Income exceeds 10 Cr. = Rate of Surcharge @ 12%

 

SURCHARGE for Foreign Company

Net Income exceeds 1 Cr. But doesn’t exceeds 10 Cr. = Rate of Surcharge @ 2%

Net Income exceeds 10 Cr. = Rate of Surcharge @ 5%

Education cess: 4% of tax plus surcharge

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