RoDTEP Scheme (Remission of Duties or Taxes on Export Products)

Overview

The RoDTEP Scheme came into existence because the USA filed a complaint against India at the World Trade Organization (WTO). USA argued that export subsidies like the MEIS scheme given by GOI give undue benefits to Indian exporters and it is against the WTO rules.
Consequently, India lost the case at WTO, and the ruling was in favour of the USA.
It meant that now India had to stop the MEIS scheme and come up with a new WTO
compliant scheme to help Indian exporters.
Hence, the Finance Minister in her Budget Speech on 1st February 2020 had announced that
Scheme for Remission of duties and taxes on export products would be launched.
Consequently, the RoDTEP Scheme was approved by the Union Cabinet on 13th March 2020
and it will get into effect from January 2021 and will be until 2025.

What is RoDTEP Scheme?

RoDTEP (Remission of Duties or Taxes on Export Products) is a Scheme for the Exporters to make Indian products cost-competitive and create a level playing field for them in the Global Market. RoDTEP Scheme will replace the current MEIS scheme, which is not in compliance with WTO norms and rules. The new RoDTEP Scheme is fully WTO compliant scheme. It will reimburse all the taxes/duties/levies being charged at the Central/State/Local level which are not currently refunded under any of the existing schemes but are incurred at the manufacturing and distribution process. Below is a diagram showing the history of export promotion schemes, for a better understanding of their evolution.

Evolution of Export Promotion Schemes in India

Features of RoDTEP Scheme

  • Currently, only the GST and the import customs duties levied on inputs required for the manufacturing of export products are either exempted or refunded in some or the other way.

  • Input tax credit (ITC) of GST paid is available, and also if exported on payment of duty then IGST refund can be claimed.

  • Import Custom duties on raw materials are exempted through the Advance Authorization scheme or refunded through the Duty Drawback scheme.

  • However, still, there are many duties and taxes levied by the Central and State Government which are not refunded. It adds up to the final cost of resultant products and makes Indian products uncompetitive in the global market.

The RoDTEP Scheme aims to refund all those hidden taxes and levies, 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.

Procedure For RoDTEP Scheme Application

  • The new RoDTEP Scheme is similar to the existing RoSCTL Scheme (Rebate of State and Central Taxes and levies), or we can also say that RoSCTL is the earlier version of RoDTEP.

  • The existing RoSCTL Scheme is only for the made-ups & apparel sectors.

  • The application will be made under RoDTEP as we are doing for RoSCTL.

  • An application shall be filed online using Digital signature Certificate on DGFT website at http://dgft.gov.in in the concerned RA.

  • Relevant Shipping bills shall be linked with the online application by the Exporter/Applicant.

  • The refund under RoDTEP Scheme would be in the form of duty credit which will be transferable, or it may be in the form of electronic scrip which will be maintained in the electronic ledger.

The implementation of the process will be done with the help of end to end digitization.

Documents required for RoDTEP Scheme Application

Following Documents shall be required for the application under RoDTEP:

  • Shipping bills.

  • Electronic bank realization certificate (E-BRC).

  • Registration Cum-Membership Certificate (RCMC).

  • DGFT Digital Signature Certificate.

Rate of Rebate Under RoDTEP Scheme

  • The rates are yet to be decided under the RoDTEP Scheme. The Finance Minister Nirmala Sitharaman had announced to incentivize exporters under RoDTEP at an estimated cost of Rs 50,000 crore in her speech last year. In contrast, the allocations for MEIS were Rs 40,000 crore. Hence it is expected that the rate of reward will be better under the new Scheme OR the rates will be lowered and new products will be added.

  • It will be calculated as a percentage on Free on Board (FOB Value).

  • It has been decided that the existing sectoral norms committee structure in the DGFT headquarters will function as Sectoral RoDTEP Committees (SRCs) to determine and recommend rates and value caps for various items under RoDTEP.

  • The committee had decided that Items will be shifted from existing Scheme MEIS to RoDTEP in a phased manner with the help of proper monitoring and audit system, i.e. when the rate under RoDTEP Scheme is announced for any item at the same time MEIS benefit will discontinue for that particular item.

  • Exporters have continuously complained that all the indirect taxes are not getting considered/refunded in any of the schemes, so the new Scheme RoDTEP will be beneficial for them when it’s implemented. Notifications will be provided separately for the Detailed operation framework under the new RoDTEP Scheme.

How can we assist you to claim benefits under the RoDTEP scheme?

  • We are the team of highly motivated DGFT professionals providing DGFT services over the years.

  • Our goal is to stay ahead of the curve by being on the top of the news, comprehending new schemes and all the policies into them, realizing the benefits for exporters and importers, turning the policies into a simple form that is easily understandable to our clients.

  • We have an experienced team working on understanding the foreign trade policies and finding the value it will add to our client base from various industries in the most effective manner.

  • We assist our clients by updating them about the foreign trade policies so that they can understand the value addition policy will bring for their benefit and also guide them from document preparation to obtaining the License in hand under the RoDTEP scheme.