DUTYDRAWBACK

[S.C. WADHWA]

A Ltd. Co. made export sales in Financial Year 2013-14. Total 9 Invoices were raised. It is in receipt
of duty drawback in respect of such export sales. It received duty drawback in respect of certain
invoices in Financial Year 2013-14 and in respect of certain invoices received in Financial Year 2014-15.
Query is ::
The amount received as duty drawback in F.Y. 2014-15 in respect of invoices raised in F.Y. 2013-14
will be treated as income in F.Y. 2014-15 or will be booked as income recoverable in F.Y. 2013-14.

[PAWAN KUMAR]

As per my view, income earned as duty drawback on export during 2013-14 is to be booked during 2013-14 irrespective of duty drawback actually received from department during 2014-15. The same would be booked as per the shipping bill generated because the shipping bill contains the amount of duty drawback sanctioned.

AI Summary

Duty drawback recognition: treat sanctioned drawback as income in the export year based on the shipping bill, not on receipt. Duty drawback constitutes export incentive income that must be recognised in the accounting period in which the export entitlement arises. Where the shipping bill generated in the export year records the sanctioned duty drawback amount, that amount should be booked as income in that export year, irrespective of actual receipt in a subsequent year.