CBIC reduces Compensation Cess to 0.1% for Merchant Exporters [Read Notification]

Through this Notification, the Ministry of Finance reduces the compensation cess to 0.1% for merchant exporters

By Kavi Priya - On January 17, 2025 9:16 pm - 2 mins read

CBIC - Ministry of Finance - Reduction of compensation cess - Merchant Exporters - TAXSCAN

The Ministry of Finance has issued Notification No. 01/2025-Compensation Cess (Rate) dated January 17, 2025, announcing the reduction of compensation cess on intra-state and inter-state supplies of taxable goods to 0.1%. This concession is aimed at registered suppliers providing goods to registered recipients specifically for export purposes. This exemption comes into effect immediately.

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Conditions for Availing of the Reduced Rate

To avail of this benefit, both the supplier and the exporter (recipient) must comply with a set of strict conditions:

Conditions for the Exemption

Tax Invoice: The supplier must issue a proper tax invoice to the buyer (exporter).
Export within 90 Days: The goods must be exported within 90 days from the date of the tax invoice.
Details in Export Documents: The buyer (exporter) must include the supplier’s GSTIN and tax invoice number in the shipping bill or bill of export.
Export Registration: The buyer (exporter) must be registered with an Export Promotion Council or a Commodity Board approved by the Department of Commerce.
Concessional Rate Order: The buyer must place an order with the supplier for the goods at the concessional tax rate of 0.1%, and a copy of this order must be shared with the jurisdictional tax officer of the supplier.
Goods Movement: The goods must be moved:
Directly to the port, inland container depot, airport, or land customs station for export, or
To a registered warehouse, from where they will then be transported to the export location.

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Aggregation from Multiple Suppliers: If the buyer collects goods from multiple suppliers, they must all be moved to a registered warehouse first, and from there to the export location.
Warehouse Acknowledgement: When goods are sent to a warehouse for aggregation, the buyer must:
- Endorse (confirm receipt of) the goods on the supplier’s invoice.
- Get an acknowledgment of receipt from the warehouse operator.
- Provide both documents to the supplier and their jurisdictional tax officer.
Proof of Export: After the goods are exported, the buyer must provide the supplier and their tax officer with a copy of the shipping bill or bill of export with the supplier’s GSTIN and tax invoice number and proof that the export has been filed in the export general manifest or export report.