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Everything you need to know about Remission of Duties & Taxes on Exported Products ( RoDTEP) scheme

This scheme was announced by Sitharaman in her Budget speech on 1st February 2020.The scheme will help in providing a level playing field to domestic exporters in the international markets.

The refunds under the RoDTEP scheme would be a step towards ‘zero-rating’ of exports, along with refunds such as Drawback and IGST. At present, GST taxes and import/customs duties for inputs required to manufacture exported products are either exempted or refunded. However, certain taxes/duties/levies are outside GST, and are not refunded for exports. 

The reimbursement of taxes such as duty on power charges and VAT on fuel in transportation and farm sector captive power generation; mandi tax; stamp duty on export documents; CGST and compensation cess on coal in power production; central excise duty on fuel used in transportation would make Indian products competitive in global markets.

Under the scheme, a mechanism would be created for reimbursement of taxes/ duties/ levies, at the central, state and local level, which are currently not being refunded under any other mechanism, but which are incurred in the process of manufacture and distribution of exported products. 

The move assumes significance as a WTO dispute resolution panel has ruled that MEIS was not in compliance with the global trade norms.These measures are compliant with the WTO (World Trade Organisation) norms. India is a member of WTO, which frames norms for global trade, since 1995.Under the WTO rules, certain duties like state taxes on power, oil, water, and education cess are allowed to be refunded. It will be given to exporters through transferable scrips.

All the process will be online to minimise human interface. The rebate would be claimed as a percentage of the Freight On Board (FOB) value of exports.As and when the rates under the RoDTEP Scheme are announced for a tariff line/ item, the MEIS benefits on such tariff line/item will be discontinued.

Benefit of RoDTEP extended to all export goods with effect from 1st January, 2021 (​​The notified rates, irrespective of the date of notification, shall apply with effect from 1st January, 2021 to all eligible exports of goods). The RoDTEP scheme would ​​refund to exporters the embedded duties/taxes that were so far not being rebated/refunded.

The refund would be credited in an exporter’s ledger account with Customs and used to pay Basic Customs duty on imported goods. The credits can also be transferred to other importers.The RoDTEP ​​rates would be notified shortly​. An ​​exporter desirous of availing the benefit of the RoDTEP scheme shall be ​​required to declare his intention for each export item in the shipping bill or bill of export.

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