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I have heard a version of this story from many exporters. The shipment clears, the buyer is happy, and everyone relaxes. Weeks later, the accountant asks, "Did we claim back the customs duty we paid on the imported fabric?" Nobody did. The money had already been written off as a cost of doing business.
What is the duty drawback scheme in India? It is a government scheme that refunds the customs duty you paid on imported raw materials, or on imported goods you send back out of India, once the goods are exported. The idea is simple: exports should leave the country without carrying customs duty on their back.
In this guide, we explain who can claim duty drawback, the three types of drawback (All Industry Rate, Brand Rate and Section 74), how rates work, how to claim step by step, the documents you need, the time limits, and the mistakes that delay refunds.
We also compare drawback with RoDTEP and GST refund. And because drawback depends on your export payment actually reaching you, we end with the other half of the cash flow: getting paid. At Infinity, we help Indian exporters receive international payments, so we have seen how closely the two are linked.
TL;DR
What is the duty drawback scheme? - It refunds customs duty paid on imported inputs used to make exported goods, or on imported goods that are re-exported. Indian Customs runs it under the Customs Act, 1962.
Who can claim it? - Exporters who have paid customs duty on inputs or on the imported goods and who actually export the goods. Manufacturer exporters can claim, and merchant exporters can claim in many cases too.
What are the types of duty drawback? - There are three: All Industry Rate (AIR), Brand Rate and re-export drawback under Section 74. Most exporters use AIR because it is the simplest.
How do you claim it? - For AIR, the claim is made through your shipping bill at the time of export, and the amount is credited to your bank account after processing. Brand Rate and Section 74 need extra applications and documents.
Can you claim duty drawback and RoDTEP together? - You can opt for both on a shipping bill, but not for the same duty. Drawback covers customs duty on inputs, while RoDTEP covers other embedded taxes.
What is the duty drawback scheme in India?
The duty drawback scheme in India refunds the customs duty you paid on imported inputs used to make export goods, or on imported goods that you re-export. It is a statutory scheme under Sections 74 and 75 of the Customs Act, 1962.
The scheme is based on a basic principle. Taxes should be consumed in the country, and not exported. If you have imported raw material, paid customs duty, made a product and exported it, the duty should come back to you. Otherwise your price abroad would be higher than it needs to be.
Two sets of rules sit behind the scheme:
Section 75 covers imported materials used to make goods that are exported. It works under the Customs and Central Excise Duties Drawback Rules, 2017, which came into effect on 1 October 2017.
Section 74 covers duty-paid imported goods that are re-exported. It works under the Re-export of Imported Goods (Drawback of Customs Duties) Rules, 1995.
What does duty drawback refund, and what does it not refund?
Duty drawback refunds | Duty drawback does not refund |
Customs duty paid on imported inputs used in export goods | GST on domestic purchases (handled through the GST refund route) |
Customs duty paid on imported goods that are re-exported (Section 74) | Other central, state and local levies embedded in the product (RoDTEP deals with these) |
Duty on inputs that were imported without paying duty |
Who is eligible to claim duty drawback?
Any exporter who exports goods from India, and who has suffered customs duty on the inputs or on the imported goods, can claim duty drawback if the scheme conditions are met. Both manufacturers and traders can fall under the scheme.
Use this checklist to see where you stand:
The goods are actually exported. Exports by sea, air and land qualify, and courier or post exports can qualify too.
Customs duty was actually paid. If your inputs came in duty-free, there is nothing to refund on that part.
Your IEC and bank details are in order. The drawback is credited electronically, so your bank account and AD code details must be valid with customs.
Export proceeds are received on time. Drawback can be recovered if the export payment is not realised within the time allowed under FEMA.
The goods are worth more than the drawback. If the market value of the goods is less than the drawback amount, drawback is not allowed.
The goods are not on the excluded list. Section 76 of the Customs Act allows drawback to be restricted for certain goods.
Can merchant exporters claim duty drawback?
Merchant exporters can claim in many cases, usually under AIR, with the right declarations on the shipping bill. A manufacturer's disclaimer may be needed in some cases, so confirm the exact conditions for your product with your customs broker.
Which duties does the duty drawback scheme cover?
Today, duty drawback mainly gives back customs duty. After GST came in, the older, higher drawback rates that also included central excise and service tax were discontinued, and the lower rates that compensate customs duty on inputs continued.
This matters because many exporters expect drawback to refund every tax in the supply chain. It does not. The GST you pay on domestic purchases is recovered through the GST refund route, and other embedded taxes are dealt with through RoDTEP. We have compared the all three later in this guide.
What are the types of duty drawback?
There are three types of duty drawback in India: All Industry Rate (AIR), Brand Rate, and re-export drawback under Section 74. Which one applies depends on how your goods were made and what you are exporting.
All Industry Rate (AIR) drawback
Quick answer: AIR is a fixed percentage of the export value that the government notifies for each product. It is the default option and the easiest to claim.
How the rate is set: The government notifies AIR product-wise in the Drawback Schedule. The rate is based on average duty paid on inputs across the industry.
How you claim: You declare it on your shipping bill. The shipping bill itself is treated as the claim.
Best for: Most regular exporters of manufactured goods.
Watch out for: Because AIR is an average, it may be lower than the duty you actually paid.
Brand Rate drawback
Quick answer: Brand Rate is an exporter-specific rate based on the duty you actually paid on your inputs. You apply for it when AIR does not exist for your product or does not cover your actual duty.
Rule 6: Used when no AIR has been fixed for the export product.
Rule 7 (special brand rate): Used when an AIR exists but is less than 80% of the duty you actually suffered on inputs.
How you claim: You file a separate application with statements of input consumption and duty paid, usually within 3 months from the Let Export Order. The time limit can be extended in some cases.
Best for: Exporters with high-duty imported inputs where AIR leaves a gap.
Watch out for: It takes more paperwork and more time, and customs verifies your figures.
Re-export drawback (Section 74)
Quick answer: Section 74 lets you claim back customs duty when you export again goods that you imported and paid duty on. You get up to 98% of the duty back for unused goods.
Time window: The goods must be entered for export within 2 years from the date of payment of duty. The Board can extend this period in a particular case.
Condition: The goods must be identified as the same goods that were imported.
Used goods: Used goods get a lower refund on a reducing scale.
How you claim: File the shipping bill under drawback so the goods can be examined for identification, then claim within 3 months of the Let Export Order.
Best for: Traders or manufacturers sending back rejected imports, surplus goods or machinery.
AIR vs Brand Rate vs Section 74 at a glance
Feature | AIR | Brand Rate | Section 74 |
When it applies | Goods made in India with imported inputs | AIR missing or too low | Imported goods re-exported |
Rate basis | Fixed % of export value | Your actual duty paid on inputs | Up to 98% of duty paid |
How you claim | Shipping bill | Separate application (Rule 6 or 7) | Shipping bill plus identification of goods |
Time limit | At time of export | 3 months from Let Export Order | Export within 2 years of duty payment, claim within 3 months of Let Export Order |
Paperwork | Low | High | Medium |
How are duty drawback rates decided and where do you check them?
Drawback rates are notified by the government in the Drawback Schedule, product by product, and they are revised from time to time. You can find your rate by matching your product's tariff item to the schedule.
Here is a simple way to check your rate:
Find the HS code or tariff item of your export product.
Look up the matching entry in the latest Drawback Schedule on the CBIC website.
Note the drawback rate and any cap per unit.
Apply the rate to the FOB value of your shipment.
How is duty drawback calculated? The basic formula is the export value multiplied by the drawback rate, subject to any cap per unit mentioned in the schedule. Here is an illustrative example only. Your actual rate depends on your product.
Item | Example |
FOB value of shipment | ₹10,00,000 |
Drawback rate (illustrative) | 2% |
Drawback amount | ₹20,000 |
Cap per unit check | Compare with the cap in the schedule, if any |
Always check the rate that applies on the date of export, since schedules change.
Duty drawback vs RoDTEP vs GST refund: what is the difference?
Duty drawback refunds customs duty on inputs, RoDTEP refunds other embedded central, state and local taxes, and GST refund returns the GST on exports. Each one covers a different tax, so they are meant to work side by side.
Factor | Duty drawback | RoDTEP | GST refund |
What it refunds | Customs duty on imported inputs or re-exported goods | Embedded taxes and levies not refunded elsewhere, such as mandi tax and electricity duty | GST paid on exports or on inputs |
How you claim | Declaration on the shipping bill | Declaration on the shipping bill, for each item | Through the GST system |
How you receive it | Credited to your bank account | Duty credit e-scrip | Refund to your bank account |
Depends on export payment | Yes, can be recovered if proceeds are not realised | Yes, subject to realisation of proceeds | As per GST rules |
Can you claim duty drawback and RoDTEP together? Yes, you can opt for both on the same shipping bill, but you cannot claim both on the same duty component. You must always check the product-wise notification before you choose.
How to claim duty drawback (step by step)
For AIR, you can claim duty drawback by filing your shipping bill with the drawback declaration, and the money is credited to your bank account after customs processes the export. Brand Rate and Section 74 need extra steps.
Check your rate. Find your product's tariff item and drawback rate in the latest schedule.
Update your details. Make sure your IEC, bank account and AD code are correct with customs.
File the shipping bill. Select the right drawback scheme code and declare your claim on ICEGATE.
Complete the export. Your goods are examined and the Let Export Order is issued. The carrier files the export manifest.
Wait for processing. Customs processes the claim and credits the drawback electronically to your account.
Apply for Brand Rate if needed. File your Rule 6 or Rule 7 application with the required statements within the time limit, and claim the difference once the brand rate letter arrives.
Keep realisation proof ready. Store your export payment proof so you can show it if customs asks.
What documents are required to claim duty drawback?
You need a core set of export documents for every claim, plus extra papers if you apply for Brand Rate or Section 74. The exact list can vary by port, so confirm it with your customs broker.
For every claim
Shipping bill or bill of export: the shipping bill carries your drawback declaration and acts as the claim for AIR.
Commercial invoice: shows the export value on which drawback is calculated.
Packing list: matches the goods shipped with the invoice.
Import Export Code (IEC): identifies you as the exporter.
Bank account and AD code details: needed so the drawback can be credited electronically.
Proof of export payment realisation: such as an e-BRC or FIRA, to show proceeds were received.
Extra documents for Brand Rate
Brand Rate application (Rule 6 or Rule 7): the request to fix your rate.
Statements of input consumption and duty: show how much imported input went into your export product.
Bills of entry: prove the customs duty you paid on inputs.
Manufacturer's disclaimer, if you are a merchant exporter: confirms the manufacturer is not claiming the same benefit.
Brand rate letter: issued after approval and needed for the claim.
Extra documents for Section 74
Original bill of entry and proof of duty payment: show what you paid at import.
Details that identify the goods: show these are the same goods you imported.
How long does duty drawback take and what are the time limits?
For AIR, you claim at the time of export, so there is no separate filing deadline. For Brand Rate, supplementary claims and Section 74, there is a 3 month window, and missing it can cost you the claim.
Claim type | Time limit |
AIR | Claimed through the shipping bill at the time of export |
Brand Rate (Rule 6 or 7) | Within 3 months from the Let Export Order, extendable in some cases |
Supplementary claim | Within 3 months from publication of the AIR or from communication of the brand rate, extendable in some cases |
Section 74 re-export | Goods entered for export within 2 years from duty payment, claim within 3 months from the Let Export Order |
How long does it take to receive duty drawback?
Once the Let Export Order and export manifest are complete and your bank details are valid, the drawback is credited electronically. The exact number of days varies by port and by whether any query is raised.
Common mistakes that delay or reduce duty drawback
Most duty drawback problems come from small errors on the shipping bill or missed deadlines, not from the scheme itself. These are the mistakes we see most often.
Wrong tariff item or scheme code
Your drawback rate depends on the tariff item you declare on the shipping bill. If it does not match the Drawback Schedule, you may get a lower rate, a nil rate or a query from customs. The scheme code matters too, because it tells customs whether you are claiming AIR or applying for a brand rate. To avoid this, match your product description to the schedule before you file, and ask your customs broker to double-check the code.
Outdated bank or AD code details
Drawback is credited electronically, so your bank account and AD code must be valid with customs. If you changed banks or the details were never updated, the credit can get stuck even when the claim is approved. To avoid this, check your registered details before every shipment, especially after any change of bank.
Missing the Brand Rate window
Some exporters select the brand rate option on the shipping bill but never file the Rule 6 or Rule 7 application. The application is generally due within 3 months from the Let Export Order, and extensions are possible only in some cases. After that, the claim is hard to recover. To avoid this, note the deadline on the day your shipment is cleared and start collecting papers early.
Weak input statements for Brand Rate
Customs checks brand rate applications against your actual input use and the duty you paid. Incomplete statements, missing bills of entry, or figures that do not tally are common reasons for delay or rejection. To avoid this, keep your import records, consumption figures and bills of entry organised before you apply.
Missing the supplementary claim window
If a revised AIR is published, or a brand rate is communicated, after your export, you can file a supplementary claim for the difference. But the claim must be filed within 3 months from the publication of the AIR or the communication of the brand rate, with extensions possible in some cases. To avoid this, watch for rate notifications that affect your products after you ship.
Claiming on inputs imported duty-free
Drawback refunds duty that was actually paid. If some of your inputs came in without paying customs duty, for example under a duty exemption scheme, drawback is not allowed on that part. To avoid this, separate duty-paid inputs from duty-free inputs before you work out your claim.
Export payment not realised on time
Drawback is linked to the export payment. If the sale proceeds are not realised within the time allowed, customs can recover the drawback already paid, and if only part of the payment is realised, the recovery is in proportion to the unrealised part. If you receive the money later, the drawback can be repaid to you. To avoid this, follow up on buyer payments early and keep your realisation proof safe.
Overlapping claims on the same duty
Drawback and RoDTEP cover different taxes. Claiming both on the same duty component can lead to queries and recovery later. To avoid this, check the product-wise notifications and decide what you are claiming on each item of the shipping bill.
Receive international payments on time with Infinity after you claim your drawback
Duty drawback gives your money back, but only if the export payment itself reaches you on time. That is why smooth international payment collection matters as much as the drawback claim itself.
At Infinity, we help Indian exporters receive international payments in a simple, RBI-regulated way. Here is how it can help your export cash flow:
0.5% all-inclusive fee, with no separate FX markup and no additional GST.
24 hours settlement, so your export money reaches your account quickly.
Free FIRA, which you can keep as documentary proof of receipt.
Multi-currency accounts, with 50+ currencies and 160+ countries supported.
A dedicated account manager to help when you have questions.
A dedicated mobile app to track payments on the go.
Getting started takes a few simple steps. Sign up in about 2 minutes, complete verification and KYC the same day, receive bank details in multiple currencies, and start receiving payments.
If you want to read more about export benefits, see our guides on:
You can also explore our page on international payments for exporters. Start receiving your export payments seamlessly with Infinity.
FAQs
What is the duty drawback scheme in India?
The duty drawback scheme in India refunds the customs duty paid on imported inputs used in export goods, or on imported goods that are re-exported. It runs under Sections 74 and 75 of the Customs Act, 1962.
Who can claim duty drawback?
Exporters who export goods and have paid customs duty on inputs or on the imported goods can claim it. They must meet conditions such as valid IEC and bank details and timely export payment.
What is the difference between AIR, Brand Rate and Section 74 drawback?
AIR is a fixed government rate for your product. Brand Rate is a rate based on your actual duty paid, used when AIR is missing or too low. Section 74 refunds duty on imported goods that you export again.
Is duty drawback taxable income?
Duty drawback is generally treated as business income for exporters. Check how to report it with your chartered accountant.
Can I claim duty drawback and RoDTEP together?
You can opt for both on a shipping bill, but not on the same duty component. Drawback covers customs duty on inputs, while RoDTEP covers other embedded taxes.
How do I check the duty drawback rate for my product?
Find your product's tariff item and look it up in the latest Drawback Schedule on the CBIC website. Then apply the rate to your FOB value and check for any cap per unit.
How long does it take to receive duty drawback?
Drawback is credited electronically after customs completes processing of your export. The time varies by port and by whether any query is raised.
Can merchant exporters claim duty drawback?
Merchant exporters can claim in many cases, usually under AIR, with the correct declarations. Confirm the exact conditions for your product with your customs broker.
