DGFT Removes Compensation Cess Exemption for Diamond Imprest Imports under FTP 2023; Other Tax Exemptions Remain

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Dated: 22.08.2026

DGFT Removes Compensation Cess Exemption for Diamond Imprest Imports under FTP 2023; Other Tax Exemptions Remain

The Government of India has announced a significant amendment to the Foreign Trade Policy (FTP) 2023, specifically targeting the provisions related to export duty and tax exemptions. This change, formalized through Notification No. 32/2026-27 by the Directorate General of Foreign Trade (DGFT), reflects evolving policy priorities and recent recommendations from the GST Council.

Key Highlights of the Amendment

Revision of Para 4.63 of FTP-2023
- The amendment updates the language and scope of Para 4.63, which governs exemptions on various duties and taxes for imports under the Diamond Imprest Authorisation scheme.
- The revised paragraph clarifies the list of duties and taxes from which such imports are exempted, ensuring alignment with current tax regulations.
Omission of Compensation Cess Exemption
- The most notable change is the removal of the reference to Compensation Cess exemption under sub-section (9) of section 3 of the Customs Tariff Act, 1975.
- This change follows the discontinuation of Compensation Cess effective from February 1, 2026, as recommended by the GST Council in its 56th Meeting.
- As a result, imports under the Diamond Imprest Authorisation will no longer reference an exemption from a cess that is no longer applicable.
Continued Exemptions
- Imports under the Diamond Imprest Authorisation remain exempt from the following:
  - Basic Customs Duty
  - Additional Customs Duty
  - Education Cess
  - Anti-dumping Duty
  - Countervailing Duty
  - Safeguard Duty
  - Transition Product Specific Safeguard Duty (wherever applicable)
  - The whole of the Integrated Tax (IGST) leviable under sub-section (7) of section 3 of the Customs Tariff Act, 1975

Implications for Importers and Exporters

Clarity and Compliance: The amendment provides greater clarity for businesses involved in the import of diamonds under the Imprest Authorisation, ensuring they are aware of the current exemptions and the removal of outdated references.
Policy Alignment: By omitting the Compensation Cess exemption, the policy is now fully aligned with the latest GST Council decisions and the current tax landscape.
Ease of Doing Business: The continued exemption from a broad range of duties and taxes supports the competitiveness of the diamond trade and related export sectors.

Official Endorsement

This amendment has been issued with the approval of the Hon’ble Minister of Commerce & Industry and is effective immediately. The DGFT remains the nodal authority for implementation and compliance.

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Source: DGFT

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