Indian Rice Exporters Face Crippling Tax Demands On Past Shipments

New Delhi, Mar 27 (KNN) India's rice export industry is facing a severe crisis as the customs department has issued notices demanding payment of duty differentials on rice exported over the past 18 months.

This unprecedented tax demand could potentially cripple rice shipments from the world's biggest rice exporter, reported Reuters.

In a bid to control domestic rice prices ahead of crucial state and national elections in 2024, the Indian government imposed a 20 per cent export duty on white rice in September 2022, followed by a similar duty on parboiled rice in August 2023.

Initially, exporters were paying the 20 per cent duty based on the Free on Board (FOB) value of rice. However, the customs department has now mandated that exporters consider the transaction value, which includes additional costs beyond the FOB value, and pay any resulting duty difference.

The tax demand notices from the customs department explicitly state, "It is informed to pay the export duty along with applicable interest by exporters on the amounts received over and above the FOB value declared in the shipping bills."

This retroactive tax demand has sent shockwaves through the rice export industry, as exporters claim they lack the financial resources to pay the duty differential for nearly two years' worth of shipments.

(KNN Bureau)