Rates Notified for RoDTEP effective from 1st January 2021 (Remission of Duties and Taxes on Exported Products)

SYNOPSIS: 

 The government is betting on the scheme, a long time in the coming to make India’s exports more competitive in the global arena. The tax refund rates revealed by the Commerce Department show that exporters will be given tax refunds in the range of 0.5-4.3 percent. 

ABOUT  THE NOTIFICATION:  

• According to the statement, export-centric industries are being reformed and introduced to better mechanisms so as to increase their competitiveness, boost exports, generate employment, and contribute to the overall economy. 

• “This will go a long way in achieving our vision of building an ‘Aatmanirbhar Bharat’. 

• The government has announced a Rs 12,400 crore outlay for the Remission of Duties and Taxes on Exported Products (RoDTEP) export promotion scheme. 

• The Commerce Department announced on August 17 that new export refund rates under RoDTEP would cover 8555 tariff lines, or individual merchandise products traded by India internationally. 

• The announcement of the rates, which are in the range of 0.5-4.3 percent come two years after the scheme was first announced. It had missed several deadlines. RoDTEP had been live since January 1, 2021, but had remained inactive due to the unavailability of rates. 

• Commerce Secretary BVR Subrahmanyam said RoDTEP would give a boost to Indian exports, making them more competitive globally. 

INCLUDED AND EXCLUDED SECTORS:  

• It will include sectors like marine, agriculture, leather, gems and jewellery, automobile, plastics, electrical, electronics, and machinery. 

• However, exporters in sectors like steel, pharmaceutical, chemicals have been kept out of the scheme. 

• Products manufactured or exported at export-oriented units and special economic zones have been excluded from the scheme for the time being. 

• While most animal products including milk and freshwater fish will get RodTEP rate of 0.5%, agri items such as tomatoes and onions will get benefits at 4% rate.  

• Textile items such as saree and shirting fabrics will get the highest benefit at 4.3% of export value.

HOW IT WILL WORK:  

• “The scheme’s objective is to refund, currently un-refunded duties/ taxes/ levies, at the Central, State & local level, borne on the exported product, including prior stage cumulative indirect taxes on goods & services used in the production of the exported product and such indirect Duties/ taxes/ levies in respect of the distribution of exported products”, the Commerce Department said. 

• It aims to refund exporters duties and taxes such as VAT on fuel used in transportation, Mandi tax and duty on electricity used during manufacturing, that were so far not being refunded. 

• While the rebate would be claimed as a percentage of the Freight on Board value of exports, the government has clarified that rebate on certain products will also be subject to value cap per unit of the exported product. 

• The scheme is to be implemented by Customs through a simplified IT System. Rebate will be issued in the form of a transferable duty credit/ electronic scrip (e-scrip) which will be maintained in an electronic ledger by the Central Board of Indirect Taxes & Customs (CBIC). 

OTHER INFORMATION:  

• The government’s new incentive scheme is compliant with World Trade Organization rules. 

• India has set a target of $400 billion in merchandise exports for the current fiscal year ending in March 2022, compared to $291.2 billion in the previous fiscal year. 

• The government last week separately notified Rebate of State and Central Levies and Taxes (RoSCTL) Scheme for garment exporters. Both RoDTEP and RoSCTL will remain in effect for three years till March 2024. 

• The rates are much lower than MEIS rates with lesser budget allocation. 

• “RoDTEP rates, therefore, only partially compensate for the un-rebated taxes while a huge portion of the taxes on the raw-material stage will be exported abroad,” 

• RoDTEP is based on the principle that taxes and levies borne on exported products must either be exempted or remitted to exporters. The new scheme is not like the MEIS, which was an export incentive scheme, and is considered to be in violation of multilateral trade rules and has been challenged by the US at the World Trade Organization.  

THE NOTIFICATION

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SCHEDULE OF RATES

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