Deemed Exports

Deemed Exports

Transactions during which the goods supplied don’t leave the country and that payments for such supplies is received either in Indian rupees or in free foreign currency is known as deemed exports.

Unlike regular exports, deemed exports are not zero-rated supplies by default. Hence all supplies notified as supply for deemed export are subject to levy of taxes, such supplies will be made on payment of tax and can’t be supplied under a Bond/LUT. However, the refund of tax paid on the supply regarded as Deemed export is admissible to either the recipient or the supplier. The application form for refund has to be filed by the recipient or supplier (subject to certain conditions) of deemed export supplies.

The following categories of supply of goods by the main or sub-contractors shall be regarded as deemed exports, provided the goods are manufactured in India:

  1. Supply of goods against Advance License/Advance License for annual requirement/DFRC (Duty Free Replenishment Certificate) under the Duty Exemption /Remission Scheme.
  2. Supply of goods to Export Oriented Units (EOUs) or Software Technology Parks (STPs) or Electronic Hardware Technology Parks (EHTPs) or Bio Technology Parks (BTP).
  3. Supply of capital goods to holders of licenses under the Export Promotion Capital Goods (EPCG) scheme.
  4. Supply of goods to projects financed by multilateral or bilateral agencies/funds as notified by the Department of Economic Affairs, Ministry of Finance under International Competitive Bidding in accordance with the procedures of those agencies/ funds, where the legal agreements provide for tender evaluation without including the customs duty.
  5. Supply of capital goods, including in unassembled/ disassembled condition as well as plants, machinery, accessories, tools, dies and such goods which are used for installation purposes till the stage of commercial production and spares to the extent of 10% of the freight on road (FOR) value to fertilizer plants.
  6. Supply of goods to any power project and refineries or purpose in respect of which the Ministry of Finance, by a notification, permits the import of such goods at zero customs duty.
  7. Supply of marine freight containers by 100% export-oriented units (Domestic freight containers–manufacturers) provided the said containers are exported out of India within 6 months or such further period as permitted by the Customs and Supply to projects funded by UN agencies.
  8. Supply of goods to nuclear power projects through competitive bidding as opposed to International Competitive Bidding.

Benefits for Deemed Exports:

Deemed exports shall be eligible for any / all of following benefits in respect of manufacture and supply of goods, qualifying as deemed exports, subject to terms and conditions as given ANF-7A (application for claim of terminal excise duty (TED) refund / duty drawback / brand rate fixation)

  1. Advance License for intermediate supply/ deemed export/DFRC/ DFRC for intermediate supplies.
  2. Deemed export drawback.
  3. Exemption from terminal excise duty where supplies are made against International Competitive Bidding. In other cases, refund of terminal excise duty will be given.

To claim the benefits Supplier/ Recipient may file the application in ANF7A to the concerned regional authority (RA). In case of supply of goods to EOU, claim is required to be filed to the concerned Development commissioner, if claimed by EOU. Click here for ANF 7A (


Partner Message