How to Transfer and Sell Duty Credit Scrips: A Complete Overview

The international trading world involves various complexities that are complicated to tackle without official support. The Government of India knows it well because they always introduced many schemes to support international traders, especially traders involved in exporting goods or services.

Duty Credit Scrips (DCS) is among those schemes from the Indian government aimed to motivate exporters to simplify their exporting journey. It provides exporters with countless perks. Still, some exporters want to transfer and sell their DCS to another person.

If you are also wondering about how to sell duty credit scrips, you should definitely read this article. Here, we will share with you the right ways to transfer the DCS. Plus, we will provide you with some basic information about this scheme in this article. 

Whether you are a new exporter looking to explore basic Duty Credit Scrips or a holder of this scheme who wants to transfer it to another person, you should keep yourself engaged with this article.

The Indian Government‌ provides Duty Credit Scrips under the 2015-2020 Foreign Trade Policy (FTP). The issuance of DCS is done by the Directorate General of Foreign Trade (DGFT). It lets exporters like you earn credit scrips based on their trade performance. You can use these credits to offset particular taxes and duties they owe on imported goods.

The primary motive behind providing these scrips is to promote exports from India and boost the inflow of foreign currencies. When you sell goods or services in any foreign country, you will earn foreign currency.

The government gives you DCS to motivate you for more exports. You can use these scrips to pay import duties that you want to bring to India. It can help you decrease the cash you spend on taxes and free up to use on more important business activities.

The value of DCS differs from scheme to scheme and the type of goods or services and even country. However, it generally comes between 2 to 5 percent of the realized FOB value. Remember, there is an expiry period for these scrips. 

If you don’t see any use of these scrips within the validity period, you can transfer or sell duty credit scrips to someone who wants to use them to claim their benefits.

Duty credit scrips aim to simplify trade and support exporters. These scrips hold better places in schemes like EPCG, SEIS, and MEIS because they are awarded in correlation with export value or for encountering such targets.

If you want to understand how this scheme works, you should take a look at the following example: 

Suppose an exporter named Arun exports his product worth ₹10,00,000. Based on this export, he gets DCS worth 5 percent of his export value, which is ₹50,000.  Now, he wants to import raw materials for his next order that costs ₹70,000 of import duty. Here, Arun can use his 50000 strips and pay the remaining amount worth ₹20,000. It can help him to save ₹50000.

Apart from saving the cost of importing products, you can enjoy countless benefits from Duty Credit Scrips. Take a look at the top benefits of having these scrips:

• You can use DCS for instant, safe, and intelligent transactions.  
• You can use these scrips to pay several taxes and duties, like safeguard duty, basic customs duty, transitional product-specific safeguard duty, and more. It can help you save capital that can be used later for production or shipping expenses. 
•  You can easily transfer these scrips if you don’t find any use to those who can use them to settle their tax obligation.

As we mentioned before, the Duty Credit Scrips come with limited validity. Thus, we can understand that it might be difficult for you to use them within the validity period. That’s where transferring them is the best way to prevent wasting them. The following are the top 3 ways about how to sell duty credit scrips:

Most importers are always interested in getting the DCS to offset the import duties and other taxes. Therefore, selling directly to them is the best way because it doesn’t involve any middlemen to find buyers.

In the previous few years, the sale of Duty Credit Scrips on the online platform has become popular. On these platforms, you can interact with many buyers who are willing to bid on your DCS. It can drastically increase the likelihood of getting a higher price for your scrips.

You can also connect with a broker with the expertise and contacts of potential buyers for your scrips. They can often find the right broker better than you. However, they will charge brokerage fees for their service.

Once you find the right buyers for your scrips, you should transfer them officially to the buyers. The process involves minimal paperwork with the help of a Custom House Agent (CHA) to register the transfer with the customs department.

Duty Credit Scrips are the incentive from the Indian government and DGFT to empower exporters. They can help you save on the import of goods. However, these scrips come with validity that makes it difficult for most exporters to use them. You can transfer and sell them easily with a simple process.