What is RoDTEP Scheme?
The full form of RoDTEP is “Remission of Duties or Taxes on Export Products”. The RoDTEP Scheme was made operational from 1st January 2021.
The Ministry of Commerce & Industry has issued Notification No.19/2015-20 on 17th August 2021 to notify the rates and the ineligible supplies/ items/ categories under the RoDTEP Scheme. The Ministry has announced refund rates within the range of 0.5% to 4.3% on 8,555 products. The rates and valuation criteria for the new scheme can be accessed here.
On 1st January 2021, the RoDTEP Scheme superseded the overall MEIS scheme vide Press Release dated 31st December 2020. The Ministry has set aside a budget of Rs.19,400 crore for both the RoTDEP scheme and the RoSCTL (Rebate of State and Central Taxes and Levies) Scheme, where Rs 12,454 crore has been set aside for the RoTDEP Scheme. The primary intent of replacing the MEIS Scheme with the RoDTEP Scheme was to refund:
- All the taxes/duties/levies charged at the Central/State/Local level are borne on the exported product, which was not refunded under any existing schemes. This included all prior taxes included during different stages of production.
- All such taxes/duties/levies being charged at the Central/State/Local level, which were incurred on the distribution of the exported product.
Why was there a need to replace the old Schemes?
Under the Foreign Trade Policy 2015-20, multiple schemes were introduced which provided promotional measures to enhance India’s exports to balance infrastructural incompetence, make Indian products cost-competitive and provide exporters with a level playing field and increase export.
It was essential to replace the old schemes introduced under the FTP 2015-20. The rates of incentives provided under such projects did not reimburse all State and Local levies. Hence, most of these state and local taxes were included in the value of the exported goods, which resulted in increased prices on exported goods. Moreover, most of the old schemes mentioned below did not comply with WTO standards and rules.
- Merchandise Export from India Scheme (MEIS),
- Export Oriented Units (EOU),
- Electronics Hardware Technology Parks (EHTP)
- Special Economic Zone (SEZ)
- Export Promotion Capital Goods (EPCG)
The WTO’s dispute settlement panel issued a final report on 30th September 2019, stating that these schemes were inconsistent with the WTO agreements. Acknowledging the existing export subsidy schemes’ arguments, India applied to the appellate forum, saying that the panel erred in its ruling to find these schemes as export subsidies. Although the previous component is sub-judice, the Government of India, on a proactive basis, decided to re-establish the current structure and roll out a scheme compatible with WTO norms.
Some of the taxes/ duties/ levies that were not refunded under old schemes are:
- VAT on fuel used in the generation of captive power
- VAT on fuel used in farm sector (for production only)
- Mandi Tax levied by APMCs
- Coal cess
- The duty charged by the state on electricity used for manufacturing
- Toll tax and stamp duty on import-export documentation
- Embedded CGST/SGST paid on inputs used in the production of agricultural goods, purchases from unregistered dealers
- Excise duty on fuel used in transportation etc.
The benefit of introducing the current RoDTEP scheme is an entirely World trade organization (WTO) compliant scheme.
Eligibility for the RoDTEP Scheme
- Applicable across all sectors where priority is given to labor-intensive industries.
- There are no minimum export/turnover criteria.
- Goods exported through all modes available for export are eligible.
- Country of origin rules is applicable while determining the eligibility under this scheme.
The Ministry of Commerce & Industry has issued Notification No.19/2015-20 on 17th August 2021 to notify the ineligible supplies/ items/ categories under the RoDTEP Scheme. The same has been reiterated hereunder:
- Export of imported goods covered under paragraph 2.46 of FTP.
- Exports through trans-shipment (exports originating in the third country but trans-shipped through India)
- Export products that are subjected to minimum export price or export duty.
- Products restricted or prohibited for export under Schedule-2 of Export Policy in ITC (HS).
- Deemed Exports.
- Supplies of products manufactured by DTA units to SEZ/ FTWZ units.
- Products manufactured in EHTP and BTP
- Products manufactured partly or wholly in a warehouse under section 65 of the Customs Act, 1962 (52 of 1962).
- Products manufactured or exported in discharge of export obligation against an advance authorization or Duty-Free Import Authorization (DFIA) or Special Advance Authorization issued under a duty exemption scheme of relevant Foreign Trade Policy.
- Products manufactured or exported by a unit licensed as 100% Export Oriented Unit (EOU) in terms of the provisions of the Foreign Trade Policy.
- The products manufactured or exported by any units in Free Trade Zones, Export Processing Zones, or Special Economic Zones.
- Products manufactured or exported benefit from the Notification No. 32/1997 Customs dated 1st April 1997.
- Exports for which electronic documentation in ICEGATE EDI has not been generated/ exports from non-EDI ports.
- Goods that have been taken into use after manufacture.
- The Government has reserved the right to modify any of the categories mentioned above for inclusion or exclusion under the scope of RoDTEP later.
- Inclusion of exports and implementation date made by categories mentioned in the above points 9,10, and 11 above and RODTEP rates for export items under such categories would be decided based on the recommendations of the RoDTEP Committee.
- The e-scrips available under this scheme can be used only for customs leviable under the First Schedule to the Customs Tariff Act, 1975 viz. Basic Customs Duty.
- The exporter must keep records substantiating claims made under the scheme for audit and verification. A monitoring and audit mechanism with an IT-based Risk Management System (RMS) would be put in place by the Department of Revenue, CBIC. This mechanism will be responsible of physically verifying the records of the exporters on a sample basis. The sample cases for physical verification will be derived by the Risk Management System mentioned as above.
- The rebate under this scheme will not be available regarding duties and taxes already exempted/ remitted/ credited.
- The rebate will be allowed subject to the receipt of sale proceeds within the time permitted under the Foreign Exchange Management Act, 1999 (FEMA, 1999)
Declarations/ Documents needed for online application under RoDTEP Scheme
- Shipping bills
- Electronic Bank Realization Certificate (eBRC)
- Class 3 individual DSC
- Registration-Cum-Membership Certificate (RCMC)
With due consideration to the above-mentioned scheme, it would be important to note the shift which the Government has been trying to do in its policies in terms of giving benefits to the exporters of India.
Earlier the budget that was allocated to the MEIS benefit was to the tune of approx. Rs. 45,000 Crores, however, currently the proposed budgeted outlay for RoDTEP is only Rs. 12454 Crores. This shows that the Government is less keen on giving incentives that are directly related to the exports from India which provides minimum value addition in the economy of the country but rather trying to push this budget in the form of the Production Linked Incentives (PLI) Scheme which forms it basis from the production done by the Indian corporates.