Remission of Duties and Taxes on Exported Products (RoDTEP Scheme)
On 17th August 2021, the government released the guidelines and refund rates that would be followed under the RoDTEP scheme for 8,555 tariff lines. On agricultural goods which account for 13.6% of India’s total exports, the rebate amount as percentage of FOB varies from 0.5% to 4%. Other sectors like leather, gems & jewellery, marine, electronics, machinery, plastics and automobiles are also getting the assistance under the scheme.
In 2019, Government of India (GOI) announced the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme. A combination of the current Merchandise Export from India Scheme (MEIS) and Rebate of State and Central Taxes and Levies (RoSCTL), RoDTEP has been launched to augment India’s exports. This is done with the strategy of allowing reimbursement of taxes and duties, which were un-refunded till now in accordance with World Trade Organization (WTO) norms. RoDTEP is applicable for exports from 1st January 2021 onwards.
On 17th August 2021, government released the guidelines and refund rates that would be followed under the RoDTEP scheme. RoDTEP refund the currently un-refunded duties/ taxes/ levies imposed on exported products at central, state or local level. The exempted taxes and duties also include prior stage cumulative indirect taxes on goods and services which were involved in the production of exported products. Also, such duties/ taxes/ levies which are incurred in distribution of exported product are also refunded.
The rebate on the products is a notified percentage of Free on Board (FOB) value with a cap on value per unit on products where it is required. For some products, a fixed quantum for rebate amount per unit of the product is also notified.
Department of Revenue shall implement the scheme with end to end digitization for issuance of transferable Duty Credit Scrip/ electronic scrip. The record will be maintained in the electronic ledger in Central Board of Indirect Taxes and Customs (CBIC).
Rebates on the products
In total 8555 tariff lines have been granted the rebates under the scheme. On agricultural goods which account for India’s 13.6% of the total exports, the rebate amount as percentage of FOB varies from 0.5% to 4%. Other sectors like leather, gems & jewellery, marine, electronics, machinery, plastics and automobiles are also getting the assistance under the scheme.
|Rebate granted under RoDTEP on some of India’s top exported products|
Rate as % age of FOB
|71023910||Diamond, cut or otherwise worked but not mounted or set||0.01%|
|71131910||Articles of jewellery and parts thereof: Of gold, unstudded||0.01%|
|03061790||Frozen shrimps and prawns, even smoked||2.5%|
|87032291||Motor cars and other motor vehicles principally designed for the transport of <10 persons||1.0%|
|84111200||Turbo-jets of a thrust > 25 kN||1.0%|
|87089900||Parts and accessories, for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles n.e.s.||0.5%|
|71131930||Articles of jewellery and parts thereof: Of gold, set with diamonds||0.01%|
|52010015||Cotton, neither carded nor combed: Indian cotton of staple length 28.5 mm||3.1%|
Source: Directorate General of Foreign Trade
Furthermore, the entire value chain of textile industry is covered under the RoDTEP and RoSCTL.
The rates and date of implementation for the following categories of goods would be decided later based on RoDTEP committee’s recommendation:
- Products which are manufactured or exported in discharge of export obligation against Advance Authorization/ Duty Free Import Authorization/ Special Advance Authorization
- Products which are manufactured/exported by a unit which licensed as 100% Export Oriented Unit (EOU).
- Products which are manufactured/exported by units in Free Trade Zone/ Special Economic Zone/ Export Processing Zone.
Following categories/items/supplies are not eligible under RoDTEP but the government reserves the right for inclusion or exclusion of these items under the scheme in future:
- Exports through transshipment
- Export of imported goods
- Exported products which are subject to Minimum Export Price or Export duty
- Products which are restricted or prohibited for exports
- Deemed exports
- Supplies of products manufactured in DTA units to be supplied to SEZ/FTZ units.
- Products manufactured in EHTP and BTP
- Partly or wholly manufactured products in a warehouse
- Products manufactured/exported which avail the benefit under Notification No. 32/1997-Customs, Dated: 01.04.1997.
- Exports which are done from non EDI ports
- Goods put into use post manufacturing
|Comparison between RoDTEP, MEIS and RoSCTL|
|Incentive scheme||Incentive on exports of goods in form of transferable scrips||Rebate of certain central and state taxes and levies issued in the form of duty credit scrips||Refund of indirect taxes on inputs used in the manufacture of exported product that are not being currently reimbursed in any other existing schemes|
|WTO compliant||Currently under dispute whether it is compliant or non-compliant with WTO norms||Compliant with WTO trade norms||Compliant with WTO trade norms|
|Incentive||2-5% of realised FOB value of Exports in free foreign exchange or FOB value of exports as per shipping bill, whichever is lower||1-4% based on FOB value of exports in foreign currency||Product based % way of reward (to be notified)|
|Mode||Issued in the form of transferable scrips (physical copy)||Issued in the form of transferable scrips in paperless mode||To be issued in the form of transferable duty credit/ electronic scrip, which will be maintained in electronic ledger|
|Transferable||Transferable in open market||Transferable in open market||Transferable in open market|
Source: Grant Thorton
Key benefits of RoDTEP
The RoDTEP scheme is in compliance with the WTO trade norms, unlike MEIS. Furthermore, it proposes to encompass certain taxes, such as state taxes on power, oil, water and education cess, are not included. The purpose of the scheme is to provide a level playing field to the domestic players. With assured duty benefits by GOI, it will enhance more competitiveness in the foreign markets. RoDTEP will help exporters meet international criteria and augment business growth. In addition, there is an automated refund system in the form of transferable duty credit/ electronic scrips.