meis scrip

[Madhavan iyengar]

When Company A exports products it is entiled to MEIS scrip and it satisfies the condition for grant of MEIS

Company A received certificate of MEIS in FY 18-19 for ₹ 5 lacs and accoridngly accured income of ₹ 5 lacs

In FY 19-20 it utilised the scrip of ₹ 5 lacs for payment of customs duty

Since govt has clarified that when scrip is sold it attracts nil rate of duty hence becomes an exempt supply ( as per notif 13/2017)

Query: However if scrip is utilised for payment of customs duty then whether it will be an exempted supply since the scrip is tendered for payment of Customs duty ie it is a barter hence it will be treated as exempt supply at that point

and the ITC reversal will get attracted at the time when the scrip is utilised iein FY 19-20 and not when MEIS Income was accrued in FY 18-19

experts please throw light

AI Summary

Debate on MEIS Scrip Use for Customs Duty: Not an Exempt Supply, No ITC Reversal Needed A discussion on the Goods and Services Tax (GST) forum revolves around Company A's use of the Merchandise Exports from India Scheme (MEIS) scrip for customs duty payment. The query concerns whether using the scrip for customs duty constitutes an exempt supply, necessitating Input Tax Credit (ITC) reversal. Experts clarify that MEIS scrips are incentives and not barter, thus not requiring ITC reversal. The MEIS cannot be used for GST payment, and using it for customs duty does not make it an exempt supply, as it is a reward for exporting goods, not a taxable transaction.