PIB Summary- 15th June, 2024 | PIB (Press Information Bureau) Summary - UPSC PDF Download

Electronic Transfer of Duty Drawback Funds

Context

Recently, the Central Board of Indirect Taxes and Customs (CBIC) has decided to electronically transfer duty drawback funds via the Public Finance Management System (PFMS) directly to exporters’ bank accounts to ensure transparency and efficiency.

Duty Drawback

Definition:

• Under Section 75 of the Customs Act, 1962, duty drawback provides a rebate on customs duty charged on imported materials or excisable materials used in manufacturing export goods.
• This system assists exporters in reducing some of the costs associated with the export process, particularly within the supply or value chain.

Significance of Electronic Disbursal of Duty Drawbacks:
Efficiency and Transparency:

• Electronic transfer of duty drawback funds has been introduced to streamline processes, reduce processing time, eliminate manual intervention, and enhance transparency in customs operations.
• This system removes the need for physical documentation and manual processing, thus reducing the time and effort required to claim refunds.
• The electronic system improves transparency by providing exporters with real-time visibility into their claims’ status and enabling seamless refund process tracking.

Commitment to Paperless Operations:

• This initiative supports the Central Board of Indirect Taxes and Customs (CBIC)’s commitment to paperless customs and trade facilitation, leveraging the World Trade Organization’s Trade Facilitation Agreement (TFA).

Public Financial Management System (PFMS):

Overview:

• PFMS is a web-based software application developed and implemented by the Office of the Controller General of Accounts (CGA), Ministry of Finance. Initially launched in 2009 as a Central Sector Scheme by the Planning Commission (now NITI Aayog).

Objectives:

• The primary objective of PFMS is to establish a robust Public Financial Management System by creating an efficient fund flow system and a payment-cum-accounting network.

Coverage:

• Currently, PFMS includes Central Sector and Centrally Sponsored Schemes, as well as other expenditures, including Finance Commission grants.

Benefits:

• PFMS offers stakeholders a real-time, reliable, and meaningful management information system and an effective decision support system, aligning with the Digital India initiative.
• The system is integrated with the core banking system in the country, enabling seamless financial transactions and promoting transparency and accountability in managing public funds.