April 2025

IGST Deferment Under MOOWR – Is It Still Allowed? One of the most important benefits of the MOOWR Scheme (Manufacture and Other Operations in Warehouse Regulations, 2019) is the duty deferment offered to manufacturers who import goods into India. At Global Tax Masters, we regularly get asked by clients: 👉 “Whether IGST deferment is allowed under MOOWR?”👉 “Has the IGST benefit been withdrawn under MOOWR?” Let us give you the correct legal picture, based on current law and practical application. Understanding IGST in MOOWR Under the MOOWR scheme, manufacturers can import capital goods and raw materials without paying Basic Customs Duty (BCD), IGST, and other duties at the time of import. This means the payment of these duties is deferred until the goods are cleared for home consumption. This IGST deferment under MOOWR is a key cash flow advantage. It allows companies to bring in capital equipment and inputs for production without the burden of immediate tax outgo. What Is Section 65A of the Customs Act? In 2022, Section 65A was inserted into the Customs Act, 1962 through the Finance Act. This provision empowers the Government to issue notifications to restrict or withdraw IGST deferment on warehoused goods under specific conditions. This raised a question in the industry — “Has IGST benefit been withdrawn for MOOWR units?” The answer is no. While the law allows such restriction, no notification under Section 65A has been issued by the Government so far. Current Legal Status – IGST and MOOWR As of today: IGST under MOOWR continues to be deferred at the time of import. There is no notification under Section 65A restricting IGST deferment for MOOWR units. Manufacturers can import machinery and raw materials without paying IGST upfront, and duty liability will arise only when goods are cleared from the bonded warehouse. So, to answer the question:“Whether IGST deferment allowed under MOOWR?”✅ Yes, it is still fully allowed under the current legal framework.   Why This Matters The continuation of IGST deferment under MOOWR is a critical benefit for Indian manufacturers. By deferring IGST, businesses reduce working capital blockage and free up cash for operations and expansion. Unless and until the Government issues a formal notification under Section 65A, the IGST benefit under MOOWR is intact and available to all registered units. Final Word from Global Tax Masters At Global Tax Masters, we have supported over 200 clients in leveraging the MOOWR scheme for customs duty savings and compliance management. We monitor regulatory changes closely and ensure that our clients stay ahead of any policy developments. If you’re planning capital investments or considering MOOWR registration, remember: ✅ IGST in MOOWR is currently fully deferred✅ No notification under Section 65A has been issued✅ You can confidently plan imports without worrying about IGST outflow Still unsure about IGST and MOOWR?Connect with Global Tax Masters – India’s leading consultants for MOOWR registrations, duty optimization, and end-to-end import-export compliance.  

Can You Claim Depreciation on Duty-Free Machinery Under MOOWR? Yes — Here’s Why If your business is planning to register under the MOOWR scheme (Manufacture and Other Operations in Warehouse Regulations, 2019), one of the most common queries is: Can depreciation be claimed under the Income Tax Act on machines imported duty-free under the MOOWR scheme? At Global Tax Masters, we deal with this question regularly. And the answer is yes – depreciation is fully allowed. Let us explain how this works in simple terms. Understanding the MOOWR Scheme Under the MOOWR scheme, manufacturers in India can import capital goods (machinery, equipment, etc.) without paying Basic Customs Duty (BCD) and IGST at the time of import. This allows significant savings and cash flow benefits, especially for capital-intensive industries. Since the machinery is imported without payment of customs duties, many business owners wonder whether they can claim depreciation under the Income Tax Act on such assets. The confusion is understandable, but the law is clear on this. Income Tax Act on Depreciation – What the Law Says Section 32 of the Income Tax Act, 1961 allows depreciation on tangible assets like plant and machinery, as long as: The asset is owned by the assessee (wholly or partly), and It is used for business or professional purposes during the relevant financial year. Nowhere does the Income Tax Act mandate that customs duty must be paid on an imported machine to allow depreciation. This means depreciation under MOOWR scheme is fully admissible, subject to the normal conditions of ownership and usage. Actual Cost – As Per Section 43(1) The concept of “actual cost” is defined under Section 43(1) of the Act. It means the total cost of the asset to the taxpayer, reduced by any amount met by another person or government authority (like a subsidy or grant). In the case of the MOOWR scheme, there is no subsidy or grant involved. The government is only deferring the duty, not waiving it. So, the invoice value of the machine becomes the actual cost, and full depreciation can be claimed on this amount. Practical Example Let’s say your company imports a CNC machine worth Rs. 2 crores under the MOOWR scheme and saves Rs. 40 lakhs in customs duties. For income tax purposes: Actual cost of the machine = Rs. 2 crores Depreciation will be calculated on Rs. 2 crores as per applicable rates This means that depreciation on duty-free machines imported under MOOWR is absolutely permissible under income tax law. Clarifications from CBDT? As of today, there is no circular or notification from the CBDT disallowing depreciation on machines imported under MOOWR. Similar treatment has always been followed under schemes like EPCG and SEZ, where depreciation is allowed even on duty-free imports. Final Words from Global Tax Masters At Global Tax Masters, we are India’s leading consultants for MOOWR registrations and compliance. We have helped manufacturers across sectors unlock significant cost savings and simplify their import operations. We also guide clients on how depreciation under the MOOWR scheme is treated under the Income Tax Act, ensuring there is no ambiguity in their tax planning. If you are exploring MOOWR or have already imported capital goods under the scheme, rest assured — you are fully eligible to claim depreciation on the entire cost of the machinery. Have more questions on MOOWR or depreciation on duty-free machines? Contact Global Tax Masters today.