The GOI is expecting that the RoDTEP scheme, a long time in the coming to make India’s exports more competitive Globally. 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 RoDTEP Scheme:
The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme was announced by GOI (Government of India) on 14 September 2019 to boost exports by allowing reimbursement of taxes and duties, which are not exempted or refunded under any other scheme in accordance with World Trade Organization (WTO) norms.
The scheme’s objective is to refund, currently unrefunded:
- 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 production of the exported product; and
- Such indirect Duties/ taxes/ levies in respect of distribution of exported products
It may be noted that rebate under the Scheme shall not be available in respect of duties and taxes already exempted or remitted or credited.
RoDTEP had been live since 1 January 2021 but had remained inactive due to the unavailability of rates and rules and procedure.
The Scheme and rates are notified on 17 August 2021 retrospectively with effect from 1 January 2021 which covers identified export sectors and 8555 tariff lines (in addition to similar support being extended to apparel and made-ups exports under RoSCTL scheme of Ministry of Textiles). The Government has set aside Rs 12,454 crore for refunds under the RoDTEP scheme for the current fiscal.
The scheme is notified by Department of Commerce under para 4.01 (e) of Foreign Trade Policy 2015-20 and to be administered by Department of Revenue (Customs department).
Mode and use of RoDTEP Rebate:
- E-Scrip would be issued (end to end digitization)
- Maintain under Electronic Ledger
- To be used for payment of BCD (Basic Customs Duty)
- Transferable
Ineligible Categories:
| Export of Imported Goods (Para 2.46 of FTP) | Deemed Exports |
| Trans-shipment | Supply by DTA to SEZ/FTWZ units |
| Export products, subject to Export Duty/Minimum Export Price | EHTP/BTP |
| Restricted Products – Schedule 2 of Export Policy ITC(HS) | Bonded Manufacturing Warehouse (Section 65 of Customs Act, 1962) |
| Prohibited Products – Schedule 2 of Export Policy ITC(HS) | Products manufactured or exported availing benefit under Notfn. No. 32/97-Cus dated 1 April 1997 (Jobbing related) |
| Exports from non-EDI Port or electronic documentation for ICEGATE EDI has not been generated | Goods which have taken into use after manufacture |
For following categories, the implementation date will be decided later based on recommendation of the RoDTEP Committee for products manufactured or exported:
- In discharge of export obligation under Advance Authorisation or Duty-Free Import Authorisation or Special Advance Authorisation issued under a duty exemption scheme under relevant FTP
- By EOU unit
- By EPZ/FTZ/SEZ
Further, GOI reserves the right to modify any of the categories for inclusion or exclusion under the scope of RoDTEP, at a later date.
Obligation of Exporter:
- To ensure that the receipt of sale proceeds is received within time allowed under FEMA
- Maintain records substantiating claims made under the scheme
- Provide adequate records during physical verification [Selection of exporter on sample based on RMS (Risk Management System)]
Pending aspects:
- IT enable platform for RoDTEP (To be administered by DoR instead of DoC (DGFT)
- Relevant Rules and Procedure to be issued covering:
- Grant of RoDTEP Claim
- Implementation issues including manner of application
- Time period of application and other matters including export realisation
- Export documentation
- Sampling procedure
- Record keeping etc.
- Provision for recovery of rebate amount in case of non-realisation of foreign exchange,
- Suspension/Withholding of RoDTEP in case of frauds and misuse,
- Penalty
RoDTEP rates:
- In the range of 0.5-4.3 percent of FOB (Free on Board) value,
- Certain export products are subject to value cap per unit of the exported product,
- Fixed quantum of rebate amount per unit is also notified for certain products,
- RoDTEP rates to be reviewed on annual basis
| Section | Chapters Covered | Range of RoDTEP Rate as % age of FOB | UQC | Cap (Rs per UQC) |
| Section I | Chapter 03, Chapter 04, Chapter 05. | 0.5% to 2.6% | Various (Kg, u) | 0 to 16 |
| Section II | Chapter 06, Chapter 07, Chapter 08. | 0.5% to 4% | Kg | 0 to 11.9 |
| Section III | Chapter 15 | 0.5% to 1% | Kg | 0 |
| Section IV | Chapter 16 to Chapter 23 | 0.5% to 4% | Various (Kg, L) | 0 to 16 |
| Section VI | Chapter 32 to Chapter 38 | 0.5% to 1.6% | Various (Kg,m², u, m, ml) | 0 to 26.7 |
| Section VII | Chapter 39 and Chapter 40 | 0.5% to 1.4%. | Various (Kg, u, Pa) | 0 to 18.2 |
| Section VIII | Chapter 41 to Chapter 43. | 0.5% to 1.4% | Various (Kg, u). | 0 |
| Section IX | Chapter 44, Section 45, Section 46. | Rs 0.4 to Rs 400, 0.5% to 1.4% | Various (Mt,M³, Kg, u). | 0 |
| Section X | Chapter 48, Chapter 49 | 1.1% to2.4% | Various (Kg, u) | 0.9 to 3.1 |
| Section XI | Chapter 50 to Chapter 63 | 0.5% to 4.3% | Various (Kg, ,m²) | 0 to 24.5 |
| Section XII | Chapter 64 to Chapter 67 | 0.5% to 1.5% | Various (Pa, Kg, u) | 0 to 37 |
| Section XIII | Chapter 68 to Chapter 70 | 0.5to 1.00% | Various (Kg,mt,Tu,m²) | 0 to 155 |
| Section XIV | Chapter 71 | 0.01% | Various (Kg,c/k) | 0 to 2.5 |
| Section XV | Chapter 74, Chapter 75, Chapter 76, Chapter 78, Chapter 79, Chapter 80 to Chapter 83 | 0.3% to 2.2% | Various (Kg, u) | 0 to 10.8 |
| Section XVI | Chapter 84, Chapter 85 | 0.6% to 2.2%, Rs 2.30 to Rs 3.50 | Various (Kg, gi F/S, u, m) | 0 to 859.1. |
| Section XVII | Chapter 86 to Chapter 89 | 0.5% to 2.0%, Rs 8100 pu to Rs 12500 pu | Various (Kg, u) | 0 to 3825. |
| Section XVIII | Chapter 90 to Chapter 92 | 0.5% to 1.5% | Various (Kg, u) | 0 to 11.3. |
| Section XIX | Chapter 93 | 0.5% | Kg | 0 |
| Section XX | Chapter 94 to Chapter 96 | 0.001% to 1.5% | Various (Kg, u) | 0 to 265.2 |
| Section XXI | Chapter 97 | 0.01% to 0.5% | Various (Kg, u) | 0 |
Questions to ponder???
- Rates for various sectors such as Steel, Pharma, Chemical and other not notified
- Rates are considerably lower than erstwhile MEIS (Merchandise Export of India Scheme),
- Cap on benefit giving lowest ever benefit on export transactions
- The rates are not based on submissions by various industry stakeholders but based on Budgetary allotment
- Major sectors and exports such as made under Advance Authorisation, EOU, SEZ, etc not eligible as of now
- When IT platform and relevant rules would be notified
- Certain product rate based on UQC not matching with nature of products i.e. UQC is ‘u’ for product under 8413 9190, however, the rates are notified on UQC as ‘Kg’ [Entry 6078 at page number 214]
- Scheme notified by DoC and to be administered by DoR would create confusion and litigation
- Whether pending claim would be processed for all exporters in single application or not
- Issue of non-disclosure of RoDTEP under the shipping bill till date
- Non coverage of Bonded Warehouse Manufacturer under MOOWR would lead to non-workable of the said scheme
It appears that the budgetary allocation played a major role in deciding the rates, as opposed to actual component of non-creditable taxes. The RoDTEP benefit not being granted to large sectors and categories will have adverse impact on competitiveness of Indian exports and will send negative sentiment amongst the exporters.
About the Writer:
Vineet has over 16 years of consulting experience in leadership role in Indirect tax including GST (around 13 years in Big 4) and working with leading players in diverse industry sectors. He has conducted sessions on various indirect tax topics (including GST) at Client’s place, Business Parks, and other forums (ASCI, FTAPCCI, JICA, KOTRA, EPC, ICAI, ICFAI, JITO, RGA and others).
https://www.linkedin.com/in/d-vineet-suman-a5a28729
You can reach out on 91-99529 26239 or email [email protected].
Follow us: https://www.linkedin.com/company/darda-advisors-llp
