What is RoDTEP Scheme?
The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme was introduced by the Government of India on 14 September 2019 to encourage exports. It provides reimbursement of taxes and duties that aren't exempted or refunded through any other scheme, in compliance with World Trade Organization (WTO) norms.
The RoDTEP scheme is a result of a complaint filed by the USA against India at the WTO. The USA delivered its concern over the export subsidies of GOI through the MEIS Scheme that gave undue benefits to Indian exporters and they claimed it to be against the WTO norms. The case went in favor of the USA at WTO, this indicated a red flag to India’s MEIS Scheme and the requirement to come back with a new WTO compliant scheme to aid the Indian exporters. Thus, the Budget Speech delivered by the Finance Minister on 1st February 2020 declared that a scheme that’ll focus on remission of duties and taxes on export products would be instigated. Consequently, the RoDTEP Scheme sought approvals from the Union Cabinet on 13th March 2020, was implemented from 1st January 2021, and will be adhered to until 2025.
RoDTEP Scheme Features
- • As of now, the GST and import customs duties levied on inputs that are needed for manufacturing products to be exported are exempted or refunded in various ways.
- • Input Tax Credit (ITC) of GST paid can be claimed and if exports are done carried out on payment of duty then IGST refunds are also available.
- • Under the Advance Authorization scheme or the Duty Drawback Scheme, the Import Custom Duties levied on raw materials are exempted.
- • The Central and State governments levy various duties and taxes that aren’t yet refunded. This adds up to the final cost of resultant products making the Indian products uncompetitive in the global market.
- • WTO-compliant mechanism to boost export competitiveness
The RoDTEP Scheme will enable the exporters to claim a refund of all the hidden taxes and levies. For instance:
- • For transportation of export products, taxes are levied by the center and state on fuel (petrol, diesel, CNG, PNG, and coal cess, etc.).
- • The duty levied on electricity consumption for manufacturing, by the state.
- • APMCs Mandi tax.
- • Toll tax and stamp duty for import-export documents.
The RoDTEP Scheme for the exporters will cut down the taxes that previously were exported along with the goods and services. All the indirect Central and State taxes that aren’t refunded under any other scheme will also be covered under the RoDTEP Scheme.
Taxes Covered Under RoDTEP
Fuel Taxes
Taxes on petrol, diesel, CNG, PNG, coal cess etc. for transportation
Electricity Duties
State levies on power used in manufacturing
Mandi Taxes
APMC mandi taxes on agricultural produce
Document Charges
Stamp duties on import-export documentation
Segments considered under the RoDTEP
The RoDTEP Scheme would operate within a budgetary framework for every financial
year. A 12,400 Cr outlay has been
declared for the FY 2021-22.
The scheme exempts certain sectors such as pharmaceuticals, steel, organic and
inorganic chemicals as per the latest
guidelines.
According to the BVR Subrahmanyam, the commerce secretary to GOI, these sectors are
kept out of benefits because of
their beneficial performance in the global markets.
He further stated that the
scheme would regularly review items to
include or exclude as per the requirements.
- • Export of imported goods mentioned under paragraph 2.46 of Foreign Trade Policy (FTP).
- • Goods restricted to be exported under “Schedule-2 of Export Policy in ITC (HS)
- • Goods that are banned to be exported underneath “Schedule-2 of Export Policy in ITC (HS).
- • Supplies of products manufactured through DTA units to SEZ/FTWZ units.
- • Export of manufactured goods that have been used.
- • The Exports for which electronic documentation in ICEGATE EDI have not been made.
- • Exported goods claiming to get benefits of notification No. 32/1997- Customs dated 1st April 1997.
- • The Exports for which electronic documentation in ICEGATE EDI have not been made.
- • The goods that are exported from Free Trade Zones (FTZ) or Export Processing Zones(EPZ) or Special Economic Zones(SEZ).
- • The goods obtained or exported through EOU & produced in EHTP and BTP.
- • Deemed Exports.
- • The Export good is limited with a minimum export price or export tax.
- • Goods exported under Advance License/Special advance license or tax-free import authorization.
- • Products partly or wholly manufactured in a warehouse under section 65 of the Customs Act, 1962 (52 of 1962).
The government regularly reviews the inclusion/exclusion of items based on global market performance.