Remission of Duties and Taxes on Exported Products

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RODTEP - Overview

RoDTEP, or Remission of Duties and Taxes on Exported Products, is a new scheme introduced by the Indian government to replace the existing Merchandise Exports from India Scheme (MEIS). It aims to provide a level playing field to exporters by reimbursing the taxes and duties incurred by them in the production and distribution of exported goods. RoDTEP covers a wide range of products and applies to all exporters, including small and medium enterprises (SMEs). The scheme has been designed to enhance the competitiveness of Indian exporters in the global market and promote the growth of the country's exports.

What is RoDTEP Scheme?

RoDTEP Scheme stands for Remission of Duties and Taxes on Exported Products. It is a new scheme launched by the Government of India to replace the existing Merchandise Export from India Scheme (MEIS), which must be found to be compliant with global trade rules.

Under the RoDTEP scheme, exporters will be reimbursed for various duties and taxes not currently being refunded, such as state and central taxes, electricity duties, fuel used in transportation, and more. This will help make Indian exports more competitive in global markets by reducing the overall cost of exporting.

The RoDTEP scheme is expected to come into effect on 1 January 2021. It will be available to all eligible exporters in the country. It is expected to provide significant relief to exporters facing financial challenges due to the COVID-19 pandemic. It will help boost India's overall exports.

Evolution of Export Promotion Schemes in India

Export Promotion Schemes in India have evolved over time, with policy and economic priorities changes.

Here are some of the key milestones in the evolution of Export Promotion Schemes in India:

Import Substitution (the 1950s-60s):

In the early years after independence, India followed a policy of import substitution, where the focus was on developing domestic industries and reducing dependence on foreign imports. The export promotion was not a priority during this period.

Trade Liberalisation (1991):

In response to a balance of payments crisis, India implemented economic reforms in 1991 that included trade liberalisation. The government introduced a number of measures to promote exports, including the establishment of Export Processing Zones (EPZs), tax incentives, and the formation of the Export-Import Bank of India.

The Foreign Trade Policy (2004-2009):

In 2004, the Indian government launched a new Foreign Trade Policy (FTP) that aimed to increase India's share of global trade. The FTP introduced a number of new measures, including the Focus Market Scheme (FMS), the Focus Product Scheme (FPS), and the Vishesh Krishi Gram Upaj Yojana (VKGUY), which provided incentives to exporters in specific sectors.

Goods and Services Tax (GST) (2017):

In 2017, India implemented the Goods and Services Tax (GST), which replaced a number of indirect taxes with a single unified tax. The GST had a significant impact on export promotion, as it replaced some of the previous tax incentives with a refund system.

The New Foreign Trade Policy (2021-2026):

The current Foreign Trade Policy, which was introduced in 2021, aims to double India's exports of goods and services by 2025. The policy includes a number of new measures, such as the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, which provides refunds of certain taxes and duties paid on inputs used in exported products.

What Are Export Incentives?

MEIS and RoDTEP are both export incentive schemes in India that aim to make Indian exports more competitive in the global market. However, there are some key differences between the two schemes.

MEIS (Merchandise Exports from India Scheme)

MEIS is a duty drawback scheme that provides exporters with a refund of import duties and taxes paid on inputs used in the manufacture of exported goods. The scheme is applicable to a wide range of products, including textiles, engineering goods, chemicals, and pharmaceuticals.

RoDTEP (Remission of Duties or Taxes on Export Products)

RoDTEP is a newer scheme that came into effect on January 1, 2021. It is a more comprehensive scheme than MEIS, as it not only covers duties and taxes on inputs, but also other indirect taxes such as state taxes and electricity duties.

• Export Incentives and the World Trade Organisation
• Features of RoDTEP Scheme
• Eligibility for RoDTEP Scheme

Requirements of the RoDTEP Scheme

To be eligible for the RoDTEP scheme, exporters must meet the following requirements:

• Exporter Registration: The exporter must have a valid Import-Export Code (IEC) issued by the Directorate General of Foreign Trade (DGFT).
• ICEGATE Registration: The exporter must be registered on the Indian Customs Electronic Gateway (ICEGATE) and have a valid Digital Signature Certificate (DSC) Class 3.
• Country of Origin: The exported goods must be manufactured in India.
• Export Destination: The goods must be exported to any country in the world.
• Product Coverage: The exported goods must fall under the list of eligible products as specified in Appendix 4R of the Foreign Trade Policy (FTP).
• Tax Payment: The exporter must have paid all applicable taxes, including Goods and Services Tax (GST), on the inputs used in the manufacture of the exported goods.
• Time Limit: The exporter must file a claim for RoDTEP within six months from the date of shipment.
• Physical Verification: The exporter may be subject to physical verification of their records by the customs authorities to ensure compliance with the scheme's requirements.

Export Incentives and the World Trade Organisation

Export incentives are policies or programs governments implement to encourage companies to export goods or services. The World Trade Organisation (WTO) regulates global trade and has specific rules in place regarding export incentives. WTO members must report their use of export incentives to the organisation, and certain incentives are prohibited or restricted. The WTO aims to create a level playing field for international trade, and export incentives can distort competition and harm other countries' industries.

Features of RoDTEP Scheme

• Applicable to all sectors
• Priority given to labour-intensive sectors
• Present benefits under MEIS Scheme are at various rates of 2%, 3% or 5% of the export value
• Discontinuation of MEIS Scheme from 1st January, 2021 and the introduction of RoDTEP scheme from the same date
• Eligibility for manufacturer and merchant exporters as well as SEZ units
• Exports under the Advance Authorisation and EOU Units are ineligible
• No minimum export/turnover criteria
• Goods exported through all methods are eligible
• Country of origin rules apply
• Re-exported products are not eligible
• Fully automatic tax assessment
• Real-time monitoring of clearance status through a digital platform
• Can be used to pay basic customs duty on imported goods
• Transferable credits to other importers

What is Eligibility Criteria for RODTEP Scheme?

• Both manufacturer and merchant exporters (traders) are eligible for the benefits of the RoDTEP scheme
• There is no turnover threshold required to claim RoDTEP benefits
• Re-exported products are not eligible for benefits under this scheme
• The exported products must have India listed as the country of origin to be eligible for the RoDTEP scheme
• Special Economic Zone and Export Oriented Units are also eligible for benefits under this scheme
• The RoDTEP scheme also applies to goods exported via courier through e-commerce platforms.

Categories Under the RoDTEP Scheme

• Category A: includes products like agriculture, textiles, and handicrafts.
• Category B: includes products with high employment generation potential, like marine products, leather, gems, and jewellery.
• Category C: includes products with significant potential for export growth, like engineering goods, pharmaceuticals, and chemicals.
• Category D: includes products with lower priority, like plastics, rubber, and ceramic.

Procedure to Apply for RoDTEP Scheme Online

• Register on the DGFT website (https://dgft.gov.in).
• Click the 'Services' tab and select 'RoDTEP' from the dropdown menu.
• Click on 'Apply for RoDTEP'.
• Fill in the application form with the required details, such as the exporter's name, address, contact information, and export product details.
• Upload the relevant documents, such as export invoices, shipping bills, and bills of lading.
• Submit the application form and documents.
• Once the application is approved, the exporter will receive an electronic credit scrip, which can be used to pay for customs duties and taxes.

Documents required for RoDTEP Scheme

• Export invoice
• Shipping bill
• Bill of lading
• GST return filed under GST laws
• Bank realisation certificate
• Certificate of origin of the exported goods
• Any other documents as may be required by the Customs or DGFT authorities

Benefits of RoDTEP Scheme

WTO Compliant

RoDTEP scheme is in compliance with WTO trade norms, unlike the MEIS scheme.

Technologically Advanced

RoDTEP scheme uses an electronic credit ledger for maintaining input credits and RMS for risk-based profiling of shipping bills, reducing the need for physical intervention.

Multi-Sectoral

The RoDTEP scheme applies to goods from all sectors, ensuring uniformity in the country's exports.

Fully Automated Refund Module

The Ministry of Finance has created a fully automated refund module for RoDTEP, which will reduce double taxation and claims for GST tax refunds and deemed exports. This will benefit both the public and private sectors.

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 FAQ's on Remission of Duties and Taxes on Exported Products

• Has the RoDTEP scheme rates been notified?

The rates for the RoDTEP scheme have not been notified yet by the Indian government.

• What industries are covered under the RoDTEP Scheme?

The RoDTEP scheme covers goods from all sectors, including agriculture, engineering, pharmaceuticals, textiles, handicrafts, gems and jewellery, marine products, leather, and chemicals.

• Which are the sectors that have been excluded from the RoDTEP scheme currently?

Currently, petroleum and oil sectors have been excluded from the RoDTEP scheme.

• How long will the RoDTEP scheme be in effect?

The RoDTEP scheme will be in effect until the Foreign Trade Policy (2015-2020) expires, that is until 31 March, 2022.

• Is there any limit to which RoDTEP benefit can be claimed?

There is no limit to the RoDTEP benefit that can be claimed by exporters.

• Would RoDTEP scrips be transferable to any other person?

Yes, the RoDTEP scrips would be transferable to any other person or company as per the guidelines issued by the Directorate General of Foreign Trade (DGFT).

• Which are the governing regulatory bodies for the RoDTEP in India?

The RoDTEP scheme is governed by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry, Government of India. The Central Board of Indirect Taxes and Customs (CBIC) is responsible for the implementation of the scheme and the Customs department is responsible for processing RoDTEP claims.

• What are the rates of the RoDTEP scheme?

The rates of RoDTEP vary depending on the product being exported. The rates are specified in Appendix 4R of the Foreign Trade Policy (FTP). You can find the latest rates on the DGFT's website.

• Is RoDTEP taxable?

No, RoDTEP is not taxable. It is a refund of taxes and duties paid on inputs used in the manufacture of exported goods.

• Is GST applicable on the RoDTEP scheme?

No, GST is not applicable on the RoDTEP scheme

• Can we claim both RoDTEP and duty drawback?

No, you cannot claim both RoDTEP and duty drawback on the same export. You can only claim one of the two schemes.

• Who is not eligible for RoDTEP?

The following are not eligible for RoDTEP:

1. Exporters who have not obtained an IEC.

2. Exporters who are not registered on ICEGATE.

3. Exporters who have not paid all applicable taxes, including GST, on the inputs used in the manufacture of the exported goods.

4. Exporters who fail to file a claim for RoDTEP within six months from the date of shipment.

5. Exporters who export goods that are not covered under the list of eligible products in Appendix 4R of the FTP.

• How do I get my RoDTEP refund?

To get your RoDTEP refund, you need to file a claim with the customs department. The claim must be filed within six months from the date of shipment. You will need to provide the following documents with your claim:

1. Shipping bills

2. Electronic Bank Realisation Certificate (eBRC)

3. Digital Signature Certificate (DSC) Class 3

4. Registration Cum Membership Certificate (RCMC)

• Can RoDTEP be claimed in a free shipping bill?

No, RoDTEP cannot be claimed in a free shipping bill. RoDTEP can only be claimed on exports where customs duties have been paid.

• What is the rate of incentive for RoDTEP?

The rate of incentive for RoDTEP varies depending on the product being exported. The rates are specified in Appendix 4R of the FTP. You can find the latest rates on the DGFT's website.