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Background:

It is not uncommon to see that each and every country in the world is trying to encourage their exporters to do more exports to other countries by giving various incentives/rewards which in turn fetches foreign exchange into the country. There is a common saying that only Goods should be exported, not the taxes.  Hence, the Government has been providing various refunds/rewards to exporters by way of duty drawback, GST refund, MEIS, SEIS, TMA etc. Among these, MEIS (Merchandise Export from India) Scheme notified under Chapter 4 of the Foreign Trade Policy 2015-20 had been popular among the goods exporters. The objective of MEIS Scheme was to provide incentive for export of goods. The USA had filed a compliant against India at World Trade Organization (WTO) which governs trade between countries. The contention of the USA was that the incentives provided under MEIS to Indian Exporters was against the norms of WTO. The case was decided in favour of USA leaving India under compulsion to come with new scheme to replace MEIS. Hence, Union Cabinet during the month of March 2020 has approved a new Scheme RoDTEP (Remission of Duties or Taxes on Export Products) which is WTO compliant to replace MEIS. Though the effective date of RoDTEP was fixed as 1st January 2021, only a press release was issued on 31st December 2020 which stated that the committee will notify the rates under the new scheme soon.

RoDTEP Scheme rate notified:     .

As the MEIS Scheme was done away with from 01-01-2021, exporters were advised vide press release to opt for RoDTEP Scheme for the exports which are taken place after 1st January 2021. Though the exporters were opting the RoDTEP Scheme, they had no idea about the rates to be notified under the scheme. However, there was hope prevailing among all the stakeholders that the rate under the new scheme will not be less than MEIS, if not more than that. After a long wait, the DGFT has notified the framework of the scheme along with rate Schedule (Appendix- 4R) vide Notification No. 19/2015-20 dated 17-08-2021. Some salient features of the Scheme are as follows.

1. The scheme’s objective is to refund, currently un-refunded:

(a) duties/taxes and levies, at the Central, State and Local Level, borne on the exported product;

(b) Such Indirect Duties/taxes and levies in respect of distribution of the exported product.

2. The rebated under the scheme shall not be available in respect of duties and taxes already exempted or remitted or credited.

3. The ceiling rates under the scheme will be done by a Committee in the Department of Revenue/Drawback Division with suitable representation of DoC/DGFT, line ministries and experts.

4. Under the Scheme, A rebate would be granted to eligible exporters at a notified rate as

a. percentage of FOB value, or;

b. with a value cap per unit, or;

c. Specific Rate per unit of Export Product notified at 8 digits HSN code.

5. The rebate is allowed subject to receipt of sale proceeds within time limit under FEMA regulations. However, rebate would not be depended on realization of export proceeds at the time of issue of the rebate

6. The overall budget/outlay for the RoDTEP Scheme would be finalized by the Ministry of Finance in consultation with Department of Commerce (DoC) taking into account all relevant factors.

7. Rewards/Credits will be given through electronic transferrable duty scrip

8. Electronic Ledger will be maintained for e-scrips by CBIC on icegate portal

9. Eligibility for EOU/Advance Authorization/SEZ Unit etc. will be decided at a later date

10. The e-scrips can be used for payment of Customs duty (BCD) only.

DGFT has notified the framework of the scheme only. However, the operational part i.e. procedural aspect will be notified by CBIC. Already there was an Advisory dated 01-01-2021 issued to create an Electronic Leger  on ICEGATE in which step by step procedure has been illustrated. A few differences between MEIS and newly notified RoDTEP Schemes are explained in the diagram below.

MEIS Vs RoDTEP

Conclusion:

It was expected by the exporters that the RoDTEP Scheme would be just the replica of MEIS Scheme. However, after notifying the framework as well as the rate of rewards, it can be seen that the new scheme is different from MEIS scheme in many aspects. Particularly exporters of Steel, Chemicals, pharmaceuticals etc. are left out from availing the benefit under RoDTEP Scheme. Further, inclusion of EOU /SEZ unit etc. under the Scheme will be decided at a later date. From the above, it is understood that RoDTEP Scheme is not old wine (MEIS) in a new bottle as the new scheme provides remission of taxes/duties that are currently non-refunded whereas the old scheme was just a direct export incentive.

(DISCLAIMER: The views expressed in this article are strictly of author’s personal views only)

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