Urgent need help to calculate export duty

This query is : Resolved

CA NEERAJ SHARMA (Querist)
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01 July 2015 hi experts,

i want to know 2 thngs

1) if i export cloths to canada through e-business , say rs 100000rs then how much taxes i have to pay as coustom duty, and what requirement i have to fullfill under fema

2) if rather then directly sales in canada, i transfer to mr x in canada (i.e wholesaler ), who later ll sell the cloth, will its be proftable as whole assuming mr x is also my family member

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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01 July 2015 you are admissible to DGFT INCENTIVE AS MEIS SCHEME.
BOTH CONDITION WILL CALL EXPORT.

WILL U SUPPLY HERE ITC HS CODE OF THESE ITEMS...

CA NEERAJ SHARMA

CA NEERAJ SHARMA (Querist)
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12 July 2015 i didnt knw the code yet, but its cotton tshirts

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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02 August 2025 Here’s an urgent guide on **export duty and related tax & FEMA requirements** for exporting cotton T-shirts to Canada via e-business or through a family member wholesaler:

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### 1) Export Duty & Taxes on Export of Cotton T-Shirts to Canada

* **Customs Duty on Exports:**

* **Generally, exports from India are exempt from customs duty**.
* So, on exporting cloth/T-shirts, **no customs duty payable by exporter**.
* Instead, exporters benefit from **Duty Drawback** or **MEIS (Merchandise Exports from India Scheme)** incentives.

* **GST on Exports:**

* Exports are treated as **zero-rated supplies** under GST.
* You can claim refund of Input Tax Credit (ITC) on inputs used.

* **FEMA Requirements:**

* Export proceeds must be realized and repatriated within **9 months** from the date of export.
* Export invoice and shipping documents should be maintained.
* Exporter must report transactions in **Foreign Exchange Management System (FEMS)** and comply with RBI regulations.

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### 2) Export via Mr. X (Family Member Wholesaler) in Canada

* If you **transfer goods to Mr. X in Canada**:

* It will be treated as **export by you if goods physically cross from India**.
* Mr. X becomes importer/wholesaler in Canada and sells there.
* You need to **issue export invoice** and comply with export formalities.

* **Is it more profitable?**

* Profitability depends on pricing, duties in Canada, and logistics cost.
* Since Mr. X is family, you can negotiate better terms, but transfer pricing rules may apply.
* Ensure **arm’s length pricing** to avoid tax issues.

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### Summary Table:

| Aspect | Direct Export (e-business) | Export via Mr. X (Wholesaler) |
| --------------------- | ------------------------------------- | ----------------------------------------------- |
| Customs Duty in India | NIL (Exports are duty-free) | NIL |
| GST | Zero-rated, ITC refund available | Zero-rated export by you |
| FEMA Compliance | Export proceeds repatriation required | Same, as exporter |
| Profitability | Depends on direct sales margin | Depends on transfer pricing & wholesaler margin |

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### Action Points:

* Identify **HS Code** for cotton T-shirts for export documentation.
* Ensure all export documents & shipping bills are in place.
* Consult with tax expert on **transfer pricing** if exporting via family wholesaler.

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If you want, I can help you with **HS Code lookup**, export documentation checklist, or FEMA compliance checklist. Would that help?

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