India implemented a 20% export duty on white rice in September 2022, followed by a similar duty on parboiled rice in August 2023 to manage increasing domestic prices. While there is no outright ban on basmati rice exports, the government has set a minimum export price of Rs 1,200 per million tonnes (MT). However, this minimum price was later reduced to Rs 950 per MT. Additionally, to prevent the misclassification and illegal export of non-basmati white rice as Basmati rice, the government has introduced additional safeguards. Contracts for Basmati rice exports with a value of USD 1,200 per MT or higher must be registered for the issuance of a Registration-cum-Allocation Certificate (RCAC). This measure aims to ensure the quality and authenticity of Basmati rice exports while maintaining fair pricing.

Customs authorities in India have recently demanded additional duty payments from approximately 45 major rice exporters. This development comes in response to the 20% export duty that was imposed on white rice in September 2022, followed by a similar duty on parboiled rice in August 2023. The purpose of these duties was to control rising domestic prices. While there is no outright ban on basmati rice exports, the government has set a minimum export price of Rs 1,200 per million tonnes (MT), which was later reduced to Rs 950 per MT¹.

Exporters are required to pay a 20% duty based on the Free on Board (FOB) value of rice, and this export duty is then passed on to customers as an additional cost. However, customs authorities now maintain that the duty should be paid on the entire value charged to customers, resulting in an additional tax demand. Exporters argue that this approach amounts to “tax on tax” and raises concerns about the computational aspect of taxation¹.

The notices issued by customs authorities cover the period from September 2022 to January 30, 2023, and the total tax demand could be around Rs 2,000 crore. Some port authorities are also asking rice exporters to pay customs duty before clearing shipments. While this issue affects exporters across the country, it appears more pronounced at ports in southern India where consignments are currently held up. Exporters are concerned that similar tax demands may arise for other agricultural commodities subject to export duty, such as sugar, molasses, and onion¹.

In summary, the imposition of export duties and the subsequent demand for additional payments have raised challenges for rice exporters in India, potentially impacting future rice shipments from the country.

The Customs department in India has issued notices to rice exporters covering the period from September 2022 to January 30, 2023. The total tax demand from these exporters could amount to approximately Rs 2,000 crore. These notices come in response to the 20% export duty imposed on white rice in September 2022, followed by a similar duty on parboiled rice in August 2023. While there is no outright ban on basmati rice exports, the government has set a minimum export price of Rs 1,200 per million tonnes (MT), which was later reduced to Rs 950 per MT.

Additionally, some port authorities are now requiring rice exporters to pay customs duty before clearing shipments. This development has raised concerns among exporters, who argue that this approach amounts to “tax on tax” and poses computational challenges in taxation.Several members of the All India Rice Exporters Association (AIREA) have confirmed the receipt of these notices. The association is likely to convey the exporters’ grievances to the government before seeking legal remedies.

In summary, the imposition of export duties and the subsequent demand for additional payments have created challenges for rice exporters in India, potentially affecting future rice shipments from the country .