To heighten exports, the government on Tuesday, August 17, 2021, announced rates of tax refund for 8,555 products such as marine goods, yarn, dairy items under the export promotion scheme RoDTEP.
RoDTEP stands for Remission of Duties and Taxes on Export Products. This is a new scheme that is applicable from January 1, 2021, which is made to replace the existing MEIS (Merchant Exports from India Scheme). The scheme will ensure that exporters get refunds on embedded taxes and duties previously non-recoverable. This scheme was introduced to promote exports that were relatively poor in quantity earlier.
Need for the RoDTEP Scheme
The US had challenged India’s major export subsidy schemes at the World Trade Organization (WTO), claiming they were harming American workers. A dispute panel in the WTO was ruled against India, stating that the export subsidy scheme that was provided by the GoI (Government of India), violated the provisions of the WTO’s norms. The panel further recommended that the export subsidy programs be withdrawn. To ensure that India remains WTO compliant, the RoDTEP scheme came into the scenario.
Rs 19,400 crore to be provided to RoDTEP & RoSCTL
Commerce Secretary BVR Subrahmanyam said that Rs 19,400 crore for 2021-22 will be available for both RoDTEP and Rebate of State and Central Taxes and Levies (RoSCTL). The RoSCTL scheme was announced for the export of garments and apparel.
For the RoDTEP scheme, the amount is Rs 12,454 crore and the rest Rs 6,946 crore is for RoSCTL.
RoDTEP & RoSCTL will cover 95% tariff lines
“Today we have notified the rates. RoDTEP is a long-lasting scheme and it is going to be a flagship scheme of the commerce ministry. It is also compliant to the WTO,” the secretary said.
He also said that both the schemes together will cover 95 per cent of tariff lines or goods and exports. However, the three sectors of steel, pharmaceuticals and chemicals will not get the benefit of RoDTEP as they have performed well without incentives.
Tax refund rates
The tax refund rates range from 0.5 per cent to 4.3 per cent for different sectors. Rebate under the Scheme shall not be available in respect of duties and taxes already exempted or deposited or credited.
Rebates will be available on FOB value
RoDTEP support will be available to eligible exporters at the notified rate as a percentage of Freight On Board (FOB) value. Exemption on certain export products will also be subject to the price ceiling per unit of the exported product.
It will be implemented by Customs through a simplified IT system. The rebate will be issued in the form of a Transferable Duty Credit/Electronic Scrip (e-Scrip) which will be kept in an electronic ledger by the Central Board of Indirect Taxes and Customs (CBIC).
Categories that will get the benefits
The employment-oriented sectors such as gems and jewellery, agriculture, leather, marine are covered under this scheme. Other segments like electrical/electronics, automobiles, plastics, machinery are also getting support.
Categories that will not get the benefits
As per the guidelines, some categories that do not avail of the benefit include export goods that have a minimum export price, restricted and prohibited goods, deemed exports, supply of manufactured goods to SEZs by domestic tariff zone units, and products manufactured or exported by units located in Special Economic Zones.