RoDTEP SCHEME – Check RoDTEP SCHEME Significance, Coverage & Need

Hello dear aspirants!

In this blog, we will discuss the RoDTEP Scheme. This blog will provide you with relevant facts about the RoDTEP Scheme for your exam.

The Ministry of Commerce and Industry has announced rates of tax refunds under the Remission of Duties and Taxes on Exported Products(RoDTEP) scheme for 8,555 products for the FY 2021-22. It asserted that it would put ‘direct cash in the pockets of exporters’ soon.

RoDTEP SCHEME

• RoDTEP is a scheme for Exporters to make Indian products cost-competitive and create a level playing field for them in the Global Market.
• It was kicked in from January 2021, replacing the earlier Merchandise and Services Export Incentive Schemes (MEIS and SEIS) that were in violation of WTO (WORLD TRADE ORGANISATION) norms.
• The new RoDTEP Scheme is a fully WTO compliant scheme.
• It will reimburse all the taxes/duties/levies being charged at the Central/State/Local level which are not currently refunded under any of the existing schemes but are incurred at the manufacturing and distribution process.
• The tax refund rates range from 0.5% to 4.3% for various sectors.
• The rebate will have to be claimed as a percentage of the Freight on Board value of exports.
• Rebates will be issued in the form of a transferable duty credit/electronic scrip (escrip) which will be maintained in an electronic ledger by the Central Board of Indirect Taxes and Customs (CBIC).

NEED OF THE SCHEME

• The scheme was announced last year as a replacement for the Merchandise Export from India Scheme (MEIS), which was not found not to be compliant with the rules of the World Trade Organisation.
• Following a complaint by the US, a dispute settlement panel had ruled against India’s use of MEIS as it had found the duty credit scrips awarded under the scheme to be inconsistent with WTO norms.

COVERAGE OF THE SCHEME

• It covers about 75% of traded items and 65% of India’s exports.
• 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.
• Steel, pharma and chemicals have not been included under the scheme because their exports have done well without incentives.

SIGNIFICANCE OF SCHEME

• Enhance India’s Competitiveness:

The reimbursement of taxes such as duty on power charges, Value-Added Tax on fuel in transportation, Farm Sector etc. will make Indian products competitive in global markets. It is expected to significantly impact India’s competitiveness, trade flows and export numbers over the next 5-10 years.

• Par with International Standards:

Indian exporters will be able to meet the international standards for exports as affordable testing and certification will be made available to exporters within the country instead of relying on international organizations. This would increase the economy for the country and working capital for the enterprise.

• Automated Tax Assessment:

Tax assessment is set to become fully automatic for exporters. Businesses will get access to their refunds for GST (Goods and Services Tax) via an automatic refund-route.

This is all about the RoDTEP Scheme. We hope that this blog was informative for you. For more information and to clear your concepts regarding the preparation, try Hranker Study Material.

Also, try the Hranker Test Series for enhancing your speed and accuracy.

Thank you!