Due to the current globalized economy, the export competitiveness of a country’s goods is greatly impacted by both its price structure and the removal of “taxes on exports.” Therefore, the Indian Government has put into place a plan called "Remission of Duties and Taxes on Exported Products." This program became effective on January 1, 2021, was replaced by the current Merchandise Exports From India Scheme, and was created in accordance with World Trade Organisation standards while providing additional support to the Indian exporting community.


What is the RoDTEP Scheme?

The RODTEP program is designed using the primary idea that “Taxes & Duties should not be Exports.” Although there are currently operating methods to get back taxes (such as GST), many of the exporters have some “Hidden”  costs.  RODTEP focuses on the refund of Embedded Duties and Taxes previously challenged to get back. Tax and Duties Refund to Exporter will provide Central and State Tax on the use of Fuel, Electricity Duty, Mandi Tax, and Stamp Duty on Export Documentation.


Key Features and Objectives

RoDTEP’s main goal is to provide exporters with access to liquidity and increase competitiveness for Indian goods in world markets. The following are some of the main aspects of RoDTEP:


  1. WTO Compatible/Compliant: RoDTEP has been designed to meet the requirements of WTO compatibility/compliance and does not include any kind of export subsidy (as it was challenged at the WTO). The refund for each of the imports or exports is a transparent remission of the customs duty.


  1. Digital Integration: RoDTEP has been completely incorporated into a digital platform and is managed through a digital platform. The credits will be issued as electronically transferable scrips. A ledger (by the Central Board of Indirect Taxes and Customs, CBIC) will maintain records of each scrip.


  1. Wide Coverage: RoDTEP covers over 10,000 export product lines, which include many industries, including agriculture, textiles, leather, and automobiles.


How the Remission Works


The exporters will be given a refund of taxes in the form of a percentage of the Freight On Board (FOB) value of the goods. The percentage will lie between 0.3% and 4.3%.


Once this process is completed, a rebate is credited to the Electronic Cash Ledger of the exporter in the form of duty credit scrips. The scrips are very flexible in nature; they can be used to pay basic customs duty on imported goods or can be sold/transferred to others.


Eligibility Criteria


To qualify for the scheme, the exporters need to meet a few requirements:


  • They should be a manufacturer-exporter or a merchant-exporter.
  • They should be from India.
  • They should declare their intent to claim RoDTEP in the Shipping Bill at the time of export.


Initially, certain types of exports, like those from SEZs (Special Economic Zones) and EOUs (Export Oriented Units), were excluded from the scheme. However, these have now been brought under the scheme to create a level playing field.


Conclusion


With the implementation of the RoDTEP scheme to reduce local tax burdens, the Indian Government has provided support for both small- and large-scale exporters to be able to compete successfully against global competitors. For those Indian businesses wanting to grow internationally, it is critical to know and utilize the RoDTEP scheme in order to remain competitive with low margins and to continue growing sustainably around the world.


Moreover, if you want any other guidance relating to the RoDTEP scheme, please feel free to talk to our business advisors at 8881-069-069.