The Special Task Force (SIT) on black money has asked Enforcement Directorate (ED) to take action against 688 companies under the Foreign Exchange Management Act (FEMA) for failing to bring export proceeds to in the country.
According to a finance ministry statement, these companies had exports proceeding pending realisation for more than Rs 100 crore.
RBI regulations require exporters to bring back foreign exchange into the country as export proceeds within one year of the date of exports. The data on whether a particular exporter has brought export proceeds into the country is maintained by RBI. Not bringing export proceeds is a violation of Foreign Exchange Management Act (FEMA).
The SIT has also asked the Directorate of Revenue Intelligence (DRI) to check its database to see how many companies have claimed duty drawback but have failed to bring export proceeds and take necessary action against them.
Exporters can claim duty drawback - refund of taxes paid on inputs to manufacture goods to be exported - on exports made only if the exporter has brought export proceeds back into the country.
The SIT has observed that by not bringing export proceedings to the country, the government not only loses taxes through wrongful claim of duty drawback but also export proceeds.