Government issues Press Release on Liberalised AEO Package under Customs for MSMEs

 

This Tax Alert summarizes a recent Press Release issued by the Ministry of Finance regarding “Liberalised MSME AEO Package” scheme for Micro Small and Medium Enterprises (MSMEs).

Earlier, a Circular² was issued by the Central Board of Indirect Taxes and Customs (CBIC) in this regard.

The procedural modifications and relaxations for Authorized Economic Operator (AEO) accreditation of MSMEs under customs, having a valid certificate from their line Ministry, are as under:

 

·         The requirement of handling minimum 25 customs clearance documents during the immediately preceding financial year has been relaxed to 10 documents (subject to handling at least five documents in each half year period of the preceding financial year).

·         The requirement to have business activities for at least three financial years preceding the date of application has been relaxed to two financial years.

·         The qualifying period for legal and financial compliance has been reduced to two financial years.

·         The time limit for processing of AEO T1 and AEO T2 application has been reduced to 15 working days and three months respectively, after electronic submission of complete documents. 

·         Certain additional benefits, like further reduction in bank guarantee requirements, have also been granted and will be expanded subsequently.

 

Comments

The package is likely to benefit the MSME sector which is significantly impacted due to the COVID-19 pandemic.

Further, the relaxations provided may increase coverage of MSMEs under AEO scheme and facilitate ease of doing business. The success of the liberalised scheme may however depend on its effective implementation and execution.