The RoDTEP Scheme came into existence because USA filed a complaint against India at the WTO stating that export subsidies like the MEIS scheme given by the Government of India (GOI) gave undue benefits (as payments under the scheme were not strictly calculated on the basis of input taxes) to Indian exporters and was against the WTO rules. India lost the case at WTO and had to come up with a new WTO-compliant scheme to help Indian exporters. Hence, the RoDTEP Scheme was approved by the Union Cabinet on 13th March 2020 and it will be effective from January 2021.
Scope of the Scheme
RoDTEP will replace MEIS(Merchandise Export from India Scheme) and Under the scheme, the central, state and local duties or taxes will get refunded and credited in an exporter’s ledger account with customs. This can be used to pay basic customs duty on imported goods. The credits can also be transferred to other importers.
The RoDTEP scheme is expected to be more acceptable at the WTO as the reimbursement rates are based on actuals and is minutely linked to all input taxes and duties paid by exporters. These include embedded taxes, such as local levies, coal cess, mandi tax, electricity duties and fuel used for transportation, which are not exempted or refunded under any other existing scheme.
The RoDTEP scheme is expected to be more acceptable at the WTO as the reimbursement rates are based on actuals and is minutely linked to all input taxes and duties paid by exporters. These include embedded taxes, such as local levies, coal cess, mandi tax, electricity duties and fuel used for transportation, which are not exempted or refunded under any other existing scheme.
Objectives of RoDTEP Scheme
- To boost export
- To make Indian products cost-competitive and create a level playing field for Indian exporters in the global market.
Eligibility
- The Scheme will enclose all sectors (including textiles), with priority given to labour-intensive sectors.
- Both merchant exporters (traders) and manufacturer exporters are eligible.
- SEZ Units and EOU Units are also eligible to claim benefits.
- There is no minimum turnover criteria to claim RoDTEP.
- Goods exported through e-commerce platforms via courier are also eligible.
- Country of origin of the exported products should be India, re-exported products are not eligible.
Features of RoDTEP Scheme
RoDTEP Scheme aims to refund all those hidden taxes and levies which are allowed to be refunded under WTO rules, For example:
- Central & state taxes on the fuel (Petrol, Diesel, CNG, PNG, and coal cess, etc.) used for transportation of export products.
- The duty levied by the state on electricity used for manufacturing.
- Mandi tax levied by APMCs.
- Toll tax & stamp duty on the import-export documentation. Etc.
The Scheme will ensure that the Exporter only export goods and services not any kind of taxes and the RoDTEP Scheme would cover all indirect Central & State taxes which are not
reimbursed in any existing scheme.
- Earlier incentives are provided in the form of transferable Scrips, but this new scheme aims at creating an Electronic credit ledger in the customs system which enables digital refund to exporters, duties and taxes levied at the centre, state and local levels.
- MoF has announced that the ITC will create a fully automated refund module to the manufacturing and service sector through Form GST RST-01. The automation shall reduce double taxation, claims for deemed exports, claiming GST tax refunds and acts as an authentic source to UN, WTO and other foreign embassies.