RoDTEP scheme

Why in news?

• The commerce ministry on 17^th August 2021 announced guidelines and rates of the long pending Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for 8555 export items for a cost of ?12500 crore to the exchequer.  

About the scheme:

• RoDTEP Scheme allows exporters to receive refunds on taxes and duties that are not exempted or refunded under any other scheme.
• This scheme replaced the ongoing Merchandise Exports from India Scheme (MEIS).

How it works?

• According to existing rules, goods and services tax (GST) and customs duties for inputs required to manufacture export products are either exempted or refunded.
• However, certain duties are outside the ambit of GST, and are not refunded to exporters, such as value-added tax on transportation fuel, mandi tax and duty on electricity for manufacturing. 
• RoDTEP has created a mechanism to reimburse such central, state and local taxes, which are not being refunded under any other scheme.
• The refund would be credited to an exporter’s ledger account with the customs, and will be used to pay basic customs duty on imported goods.
• The credits can also be transferred to other importers.
• RoDTEP is based on the principle that taxes and levies borne on exported products must either be exempted or remitted to exporters.
• RoDTEP rates will vary from 0.5-4.3% of export value and will include sectors like marine, agriculture, leather, gems and jewellery, automobile, plastics, electrical, electronics and machinery.

Difference between MEIS and RoDTEP

• The new scheme is not like the MEIS, which was an export incentive scheme, and is considered to be in violation of multilateral trade rules and has been challenged by the US at the World Trade Organization. 

Exemptions:

• Exporters in sectors like steel, pharmaceutical, chemicals have been kept out of the scheme.
• Products manufactured or exported at export-oriented units and special economic zones have been excluded from the scheme

PRACTICE QUESTION:

With reference to ‘Remission of Duties and Taxes on Exported Products (RoDTEP) scheme’, consider the following statements:

1. It replaces Service Exports from India Scheme (SEIS)

2. The scheme allows exporters to receive refunds on taxes and duties that are not exempted or refunded under any other scheme.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer