Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme

Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi, has given its approval on 13th March 2020 for introducing the Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP). The Indian Government has come up with a WTO compliant scheme called ‘Remission of Duties or Taxes on Export Products’ (RoDTEP) to replace the present scheme of MEIS & RoSCTL with effect from 1st April, 2021.

Under this 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.

Press Release dated 31st December, 2020

In relation to the same, the Ministry of Finance has recently issued a Press Release dated 31 December 2020. Key Highlights from press release:

– Benefit of RoDTEP extended to all export goods with effect from 1st January, 2021

- 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.

– The RoDTEP shall be allowed, subject to specified conditions and exclusions.

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Advisory dated 1st January, 2021

ICEGATE has issued Advisory on 1st January, 2021 providing the step-by-step guide for the user to create a RoDTEP credit ledger account, generate scrips and transfer the scrips to any other IEC. The followings are the broad overview:

I. To avail the scheme exporter shall make a claim for RoDTEP in the shipping bill by making a declaration.

II. Once EGM is filed, claim will be processed by Customs.

III. Once processed a scroll with all individual Shipping Bills for admissible amount would be generated and made available in the users account at ICEGATE,

IV. User can create RoDTEP credit ledger account under Credit Ledger tab. This can be done by IECs who have registered on ICEGATE with a DSC.

V. Exporter can log in into his account and generate scrip after selecting the relevant shipping bills

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This scheme is going to give a boost to the domestic industry and Indian exports thereby providing a level playing field for Indian producers in the International market so that domestic taxes/duties are not exported.  The refunds under the RoDTEP scheme would be a step towards “zero-rating” of exports.

Salient Features of Scheme

-       GST and customs duties on 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, such as, VAT on fuel used in transportation, Mandi tax, duty on electricity used during manufacturing etc. These would be covered for reimbursement under the RoDTEP Scheme.

-       The sectors to be covered and extent of benefit to be given on various items are yet to be notified by the Department of Commerce (DoC) in consultation with Inter-Ministerial Committee.

-       The rebate would be claimed as a percentage of the freight on board (FOB) value of exports.

-       A monitoring and audit mechanism, with an information technology based risk management system (RMS), would be put in place to physically verify the records of the exporters.

-       Decrease in credit interest rates to MSMEs.

-       Increase in loan availability for exporters introduced through ECG acting as guarantee for loans availed.

-       A budget to provide higher insurance cover through Export Credit Guarantee Corporation (ECGC), to increase the lending opportunities from banks.

-       Reduction in turnaround time on airports and ports to decrease delays in exports. A real time monitoring of clearance status via digital platform will be made available.

Publication on Benefits to SMEs and Startups:

With the objective to provide an understanding of various benefits available to SMEs and Start ups, a document is published by NJP that includes:
- MSME Definition and Udyam Registration
- Benefits to MSME : Central, State and Export Government Schemes
- Start up benefits
- RoDTEP
- Taxation
- Cost models

Click Here to access the Publication.

About Chintan Patel FCA, CPA(USA), Cert.IFRS(ICAI), CISA (USA), DISA, DIRM

CA Chintan Patel is a partner of Naresh J. Patel & Co. Chartered Accountants (www.nareshco.com). Key Professional Contributions: Immediate Past Chairman of Ahmedabad Branch of WIRC of ICAI, Co-author of book on Ind AS & ICDS published by Taxmann, Trainer/Faculty at more than 300 seminars/conferences. He has over 15 years of post qualification experience working with SMCs, MNCs on International GAAP, Companies Act, 2013, GST and other advisory.
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