The government on Tuesday announced the much-awaited guidelines and tax refund rates for the export boosting scheme Remission of Duties and Taxes on Export Products (RoDTEP) for 8,555 export items.
The outlay for the scheme is Rs 12,454 crore in the current fiscal, with the refund rates ranging from 0.5 per cent to 4.3 per cent.
The scheme was notified on January 1 and replaced the controversial Merchandise Exports from India Scheme (MEIS) after a World Trade Organisation (WTO) ruling stated that it violated the provisions of the global trade body by giving export subsidies for a wide range of goods. RoDTEP aims to refund to exporters the embedded non-creditable central, state and local levies paid on inputs. These taxes were not being refunded till now.
Even as the refund rates were announced eight months after the scheme was notified, the government said that the benefits will kick in from 1 January, 2021. The department of commerce and the finance ministry are working out the outgo for January-March (2020-21), which officials said will be calculated on a pro-rata basis.
Commerce secretary BVR Subrahmanyam said the scheme is WTO-compliant and will not face any threat under any international dispute.
Subrahmanyam further said that including the Rebate of State and Central Taxes and Levies (RoSCTL)-- a similar scheme for garments and made-ups--the total outgo from the Centre will be Rs 19,400 crore.
“At a time when the country is trying to come out of the Covid pandemic, Atma Nirbharta is the priority of the government. This is money being directly put into the pockets of exporters. A couple of more backlogs will also be cleared in the next few weeks,” Subrahmanyam told reporters, adding that the government will soon clear arrears from three key schemes--Target Plus, Services Export from India Scheme (SEIS) and MEIS.
Notifying the RoDTEP rates the scheme is expected to come as a huge relief for exporters and remove uncertainty from the minds of the trade and industry thereby forging new contracts with the foreigner buyers.
“The much-awaited rates will help in easing the liquidity of the exporters, ensuring predictability and stability thus helping competitiveness of exports over a long-time horizon. The RoDTEP coupled with GST refund and Duty Drawback ensure that our export products do not contain any incidence of taxes and duties,” Sakthivel, President, Federation of Indian Export Organisations (FIEO) said.
An official statement said that RoDTEP will boost Indian exports by providing a level playing field to domestic industry abroad.
“RoDTEP support will be available to eligible exporters at a notified rate as a percentage of Freight On Board (FOB) value. Rebates on certain export products will also be subject to value cap per unit of the exported product. Rebates will be issued in the form of a transferable duty credit/ electronic scrip (e-scrip) which will be maintained in an electronic ledger by the Central Board of Indirect Taxes & Customs (CBIC),” the statement said.
Abhishek Jain, Tax Partner, EY, said that the export industry would hope for a seamless transition into a new scheme with equitable benefit.
Employment-oriented sectors such as marine, agriculture, leather, gems and jewellery are covered under the scheme. Other sectors such as automobile, plastics, electronics, among others will also be covered. Besides, the entire value chain of the textile sector will get covered through RoDTEP and RoSCTL schemes.
However, sectors such as steel, organic and inorganic chemicals, pharmaceuticals have not been included in the scheme. According to the Subhramanyam, these sectors have been doing well for themselves, which is the reason why they have not been included. Other ineligible sectors include exports by advance authorisation holders, SEZs, among others.
“It appears that the budgetary allocation played a major role in deciding the rates, as opposed to the 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,” Rohit Jain, Senior Partner, Economic Laws Practice said.
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