RODTEP SCHEME - GOVERNMENT SCHEME
News: Booster
shot: pharma, chemicals, iron, steel exports added to tax refund scheme
What's in the news?
● With
India’s exports momentum hit by waning global demand, the government on
Wednesday decided to extend the Remission of Duties and Taxes on Exported
Products (RoDTEP) Scheme to the pharmaceuticals, chemicals and iron & steel
sectors with effect from December 15.
Key takeaways:
● The
RoDTEP scheme, introduced in January 2021 to replace an earlier merchandise
export incentive scheme, is meant to provide
‘zero rating’ of exports or ensure that no domestic taxes are added to goods
meant for export.
● However,
these sectors had been excluded from the scheme so far due to fiscal
constraints as well as on the grounds that their exports were doing well even
without such benefits.
● India’s
goods exports contracted by more than 16% in October this year, slipping below
the $30-billion mark for the first time in 20 months.
● Engineering
goods, the mainstay of India’s exports in recent years that also include steel
products, dropped over 21% to $7.4 billion. Drugs and pharma exports had fell
more than 9% in October, while chemical exports slid by a steeper 16.4%.
RoDTEP:
● RoDTEP
stands for Remission of Duties and Taxes
on Export Products.
● It
is a new scheme that is applicable with effect from January 1st, 2021, formed
to replace the existing MEIS (Merchandise Exports from India Scheme).
● The
scheme will ensure that the exporters
receive the refunds on the embedded taxes and duties previously non-recoverable.
● The
scheme was brought about with the intention to boost exports which were relatively poor in volume previously.
Features:
● To
enable zero rating of exports by ensuring domestic taxes are not exported, all
taxes, including those levied by States and even Gram Panchayats, will be
refunded under the scheme.
● The
rebates under RoDTEP are WTO-compliant
as per legal advice, ranging from 0.5% to 4.3% of the Free On Board value of
outbound consignments.
● The
lowest rate is offered on items like chocolates, toffees and sugar
confectionery, while yarns and fibers have been granted the highest rate.
● Now,
the sectors such as pharmaceuticals,
chemicals and iron & steel sectors were added to the scheme to promote
their exports.
Eligibility
● All sectors,
including the textiles sector, may enjoy the benefits of the RoDTEP Scheme.
● Labor-intensive sectors
that enjoy benefits under the MEIS Scheme will be given a priority.
● Manufacturer
exporters and merchant exporters (traders) are both eligible for the benefits
of this scheme.
● There is no particular
turnover threshold to claim the RoDTEP.
● Re-exported products are
not eligible under this scheme.
● To
be eligible to avail the benefits of this scheme, the exported products need to
have the country of origin as India.
● Special Economic Zone
Units and Export Oriented Units are also eligible to claim the benefits under
this scheme.
● Where
goods have been exported via courier through e-commerce platforms, RoDTEP
scheme applies to them as well.