Bonded Manufacturing Scheme for Manufacturing and Processing in a Bonded Facility
Overview
India allows the manufacturing and other operations in a bonded manufacturing facility.
With continuous efforts from the government to promote India as a global manufacturing hub and dedication to business ease, the Central Board of Indirect Taxes (CBIC), the second initiative in that direction, allows imports of raw materials and capital goods into a bonded manufacturing facility without any payment for duties and other activities.
The import tax shall be postponed for the importations of raw materials or capital goods. When these inputs are used for export, the late duty is excluded. The import duty shall only be charged on the imported raw materials used in the manufacture when the finished product is cleared to the domestic market. Capital goods import duty is payable if the capital goods have been cleared to the domestic market and when.
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Note: The import tax shall be postponed for the importations of raw materials or capital goods. When these inputs are used for exportation, the deferred obligation shall be excluded. On the imported raw materials used in the manufacture are to be paid importation duty only when the finished goods are clear to the domestic market. Import duties shall be charged on capital goods if the capital goods are cleared into the domestic market
The GST can be zero-rated on finished goods if the finished goods are exported, in addition to waiving the BCD + IGST for the goods imported used.
"Bonded Manufacturing Scheme"
Advantages of bonded warehousing