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Advance Authorization ( AA )

Import and Export is a wealthy field of business and if done right can make you millions, but it does have its drawbacks. The biggest setback is the rules/fees/authorizations, since you are doing business with another country, the Indian government has a definite set of rules you must follow to make the sale or purchase. This set of rules make most people pull back from the thought of running an import-export business. However, once you are into it, the rules seem friendly and the only thing you see is growth. Talking about growth, the Government of India, to boost imports, exports, launches various schemes from time to time to attract businessmen towards the field and one such scheme is the Advance Authorisation Scheme.

What is the AAS (Advance Authorisation Scheme)? What are its benefits? How can you enroll in it? Who is eligible? These are some of the questions we will try and answer within this blog. If you want, you can also connect with us directly, according to our clients we are the best Advance Authorisation Scheme consultants in India. Without further ado, let’s start with the basics.

What is the Advance Authorisation Scheme? Who is it for?

Imagine you run a restaurant chain, when you are selling an item you are paying a fee to the government. When you are buying raw material to create that food item you are again paying a huge fee to the government. A fee on both ends would mean little or no incentive for you, right? Now let’s transfer this example to manufacturers who export certain products from India.

The Advance Authorisation Scheme is for those exporters who need to import raw material to create an exportable good, i.e, the raw material they require to manufacture their goods and make them export-ready, whether it’s packing, fuel, oil, etc. is to be imported from a 2nd country.

Why is it needed?

Now, in a general case scenario, anyone who is importing anything from another country will have to pay import duty on the item and anyone who has to export something will also be liable to show the income amount and pay taxes accordingly. If this case would be applied to exporters who fall in the category mentioned above, they would be at a huge loss, since they would be paying duties at both ends. To help such exporters, the Government of India launched the Advance Authorisation Scheme so that they do not have to pay duties on both ends.

According to this scheme, such exporters would get duty-free imports of material that is used in manufacturing their goods. But, the quantity of such imports is fixed by the GOI for a certain amount of manufactured goods. The DGFT has created a whole list of such exported material that requires a certain material, in certain quantities to be imported. This list has Standard Input-Output Norms (SION) that the investors can apply to.

What are the requirements?

Well, first you should have an IEC and other requisites as mentioned under the Foreign Trade Policy, Chapter 4, the policy has all other details required to take benefit of the Advance Authorisation Scheme. But this can prove to be very exhausting for exporters since there are multiple documents needed, multiple licenses, and more, failing at any of this can lead to rejection of the import license. So, it would be good if you get help from the best Advance Authorisation Scheme consultants in India.

What are the benefits of the Advance Authorisation Scheme?

The most important benefit is that you get exemption from multiple taxes, here is the list of those:

  • Education Cess
  • Anti-Dumping Duty
  • Basic Customs Duty
  • Additional Custom Duty
  • Countervailing Duty
  • Safeguard Duty
  • Duty Drawback (in certain cases where input is not mentioned in norms)
  • Integrated Tax and Compensation Cess

What is the basis of Advance Authorisation?

Here, we have listed the basis on which you can take benefit of the Advance Authorisation Scheme.

1. Inputs according to the SION

DGFT has issued certain norms and quantities for all the exports that can take benefit of the inputs, and you can use this list and norms to make the best from the scheme.

1. Self-Declaration

This is very important. Suppose the above norms do not have the list of raw materials or the right quantity of inputs you need for manufacturing. In this case, you can file a self-declaration with the number of inputs you need for x amount of manufactured goods. The RA will process the authorization and you will get to import the inputs duty-free. But, the norms committee will check and approve the claims made by you.

These two options are used very commonly and are available to all exporters who need to claim inputs under the Advance Authorisation Scheme.

Of course, all of this requires a lot of licenses and mandates and again if you need help with these, you can connect with the best Advance Authorisation scheme consultants in India.

What We Do

Under the concept, imports of the components utilised in the export product’s manufacturing could be possible. We assist with determining eligibility and obtaining AA benefits. We go over the various procedures or standards adhered to in order to obtain the AA. After the authorization is granted, the clients must adhere to the requirements and compliance guidelines. obtaining a Redemption Letter from DGFT RA and BG release following Customs’ fulfilment of the export requirement.

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Frequently Asked Questions on Importer-Exporter Code (IEC)/(E-IEC)

Well, you need to submit the following to file an IEC.

  • A scanned digital signature of yours,
  • A copy of your Pan Card,
  • Your valid contact details, i.e., phone number & email address,
  • A copy containing your branch office address,
  • A bank account details in the same name as your IEC profile,
  • A copy of your Aadhar Card that retains information matching your PAN.
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