Export markets development allowance

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This detailed article will tell you all about Export markets development allowance.

Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning.

Export Markets Development Allowance (EMDA) is a tax incentive program initiated by the Indian government under Section 35B of the Income Tax Act, 1961. This program aims to promote the expansion of export markets by reimbursing a portion of expenses incurred in promoting exports. In this article, we will discuss the key aspects of EMDA and how it can benefit Indian exporters.

EMDA provides Indian companies engaged in the export of goods or services with a deduction of a specific percentage of their eligible expenses incurred on promoting exports. Such expenses may include advertising costs, market research, publicity campaigns, trade fairs, and exhibitions.

To qualify for EMDA, a company must satisfy specific eligibility criteria. Firstly, the company must be involved in the business of exporting goods or services. Secondly, the company must have earned foreign exchange during the previous year. Thirdly, the company must have incurred eligible expenses during the previous year. Lastly, the company must hold a certificate of eligibility issued by the Director-General of Foreign Trade.

EMDA offers various advantages to Indian exporters, including the promotion of the expansion of export markets, reduction of tax liability, enhancement of competitiveness of Indian companies in the global market by providing a financial incentive to promote exports, and covering a wide range of expenses incurred in promoting exports.

To claim EMDA, a company must follow specific procedures. Firstly, the company must obtain a certificate of eligibility from the Director-General of Foreign Trade. Secondly, the eligible expenses incurred in promoting exports must be computed. Finally, the company must claim a deduction of the eligible amount while filing its income tax return.

In conclusion, EMDA is a useful program for Indian exporters, which encourages them to expand their export markets. The program provides several benefits, including reducing tax liability, increasing competitiveness, and covering a wide range of expenses. To be eligible for EMDA, a company must meet certain eligibility criteria and comply with the required procedures.