The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, launched by the Government of India in January 2021.RoDTEP is a export incentive scheme that replaced the Merchandise Exports from India Scheme (MEIS). Its primary objective is to neutralize the incidence of taxes and duties incurred during the production and export process, ensuring that Indian goods are not burdened by domestic tax costs in international markets. These taxes include central, state, and local levies that are not refunded through other mechanisms like GST or Duty Drawback.
Key aspects of RoDTEP include:
- Scope: Covers over 8,555 tariff lines across various sectors, including textiles, pharmaceuticals, chemicals, engineering goods, and agriculture.
- Refund Rates: Vary from 0.3% to 4.3% of the Free on Board (FOB) value of exports, depending on the product and sector.
- Mechanism: Refunds are issued as transferable electronic scrips through the ICEGATE portal, which can be used to pay basic customs duties or sold for cash.
Unlike MEIS, which offered direct incentives, RoDTEP focuses on tax remission, aligning with WTO’s prohibition on export subsidies. This makes it a sustainable, long-term framework for exporters.
Eligible Duties and Taxes
RoDTEP refunds taxes and duties not covered by other schemes. Examples include:
- Central Taxes: Central excise duty on fuel used in production or transportation, unrebated CGST.
- State Taxes: VAT on fuel, state levies on electricity, or embedded SGST.
- Local Taxes: Mandi tax, municipal taxes, or other levies not refunded via GST.
- Other Costs: Duties on imported inputs used in export production, not covered by Duty Drawback.
The RoDTEP Committee, chaired by the Ministry of Commerce, determines the refundable amount based on a detailed input-output analysis, ensuring rates reflect actual tax incidence.
Who is Eligible for RoDTEP?
RoDTEP is available to a broad range of exporters, subject to specific conditions:
- Manufacturer-Exporters: Those producing and exporting goods directly.
- Merchant-Exporters: Traders exporting eligible goods, provided they meet documentation requirements.
- Sectors Covered: Most industries, except those explicitly excluded (e.g., gems and jewelry under certain conditions).
- Special Economic Zones (SEZs) and Export-Oriented Units (EOUs): Eligible from August 2021, with restrictions on re-exported goods.
- Advance Authorisation Holders: Eligible for RoDTEP on exports fulfilling value-addition norms.
Exclusions include:
- Goods subject to export duties.
- Exports under 100% re-export (e.g., imported goods re-exported without processing).
- Products listed in the restricted/prohibited export categories.
Eligibility also requires compliance with the Foreign Trade Policy (FTP) and proper documentation, such as shipping bills with RoDTEP claims marked.
How Does RoDTEP Work?
The operational process involves several steps:
- Claim Filing: Exporters declare their intent to claim RoDTEP on shipping bills by selecting the appropriate option on the ICEGATE portal.
- Documentation: Submit Annexure A (details of exports) and other records, such as invoices, to validate claims.
- Verification: Customs authorities verify eligibility based on product codes, export value, and compliance with FTP.
- Scrip Issuance: Approved claims result in electronic scrips credited to the exporter’s ICEGATE account, typically within weeks.
- Utilization: Scrips can be used to pay basic customs duties on imports or transferred to other importers for a cash equivalent.
The refund amount is calculated as a percentage of the FOB value, capped at ₹50 lakh per exporter annually for certain products. Rates are notified by the Directorate General of Foreign Trade (DGFT) and updated periodically.
For MSMEs, RoDTEP is particularly valuable, as even small refunds can make a big difference in tight-margin businesses.
Challenges in Availing RoDTEP
While beneficial, the scheme has complexities:
- Documentation: Accurate records of duties incurred and export transactions are essential to avoid claim rejections.
- Rate Variations: Periodic revisions by the RoDTEP Committee require exporters to stay updated on applicable rates.
- Sector Exclusions: Some industries (e.g., steel under certain conditions) face lower rates or exclusions, limiting benefits.
- Technical Issues: Delays in scrip issuance or ICEGATE portal glitches can disrupt cash flow.
Exporters must also maintain audit-ready records, as customs authorities may conduct post-claim verifications.
How We Can Assist?
Navigating RoDTEP’s technicalities requires expertise. At Khare Deshmukh & Co our team of Chartered Accountants provides comprehensive support to exporters. We assist with eligibility assessments, claim filing, documentation, compliance, and scrip management, ensuring you maximize benefits while minimizing risks. Contact us for a consultation to explore how RoDTEP can boost your export business.
