Disbursement of Duty Refund through PFMS

The Central Board of Indirect Taxes and Customs (CBIC) has decided to electronically transfer duty refund funds directly to the bank accounts of exporters through Public Financial Management System (PFMS) to ensure transparency and efficiency.

Duty Refund

• Duty Refund under Section 75 of the Customs Act, 1962, provides exemption from customs duty applicable on any imported inputs or excisable materials used in the manufacture of export goods.
• The system helps exporters to reduce certain costs incurred during the export process, particularly along the supply or value chain.

Public Financial Management System (PFMS)

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

Objective of PFMS

• The overarching objective of PFMS is to facilitate a robust public financial management system by establishing an efficient fund flow system and payment-cum-accounting network.
• Currently, PFMS covers Central Sector and Centrally Sponsored Schemes as well as other expenditures including Finance Commission grants.
• PFMS provides real-time, reliable and meaningful management information system and effective decision support system to the stakeholders in line with Digital India initiative.
• The system is integrated with the country’s core banking system, which will ensure seamless financial transactions and transparency and accountability in the management of public money.

Importance of electronic disbursement of duty refund

• Streamlining the process: Electronic transfer of duty refund funds has been introduced to streamline the process, reduce processing time, eliminate manual intervention and enhance transparency in customs operations.
• Less paperwork: It eliminates the need for physical documentation and manual processing, thereby reducing the time and effort required to claim refunds.
• Promotes transparency: The electronic system enhances transparency by providing real-time information to exporters on the status of their claims and seamless monitoring of the refund process.
• Trade Facilitation: This initiative is in line with CBIC’s commitment towards paperless customs and trade facilitation, based on the implementation of the Trade Facilitation Agreement (TFA) of the World Trade Organisation.