Tax Refund Scheme for all Export Goods

In News

The Union Government had extended the benefits of the RoDTEP scheme to all export goods which is expected to boost exports from the country.

In-Detail

• From January 1, 2021, the government will extend the benefits of the Remission of Duties and Taxes on Exported Products (RoDTEP) to all export goods.
• The Ministry of Finance stated that the rates under this scheme are applicable from this date to all eligible export goods irrespective of the date of notification.
• The government’s decision to extend the benefits would boost exports.
• Initially, the scheme was extended to only three sectors with limited resources.
• The Department of Commerce will notify the rates of the scheme based on the recommendation of a committee constituted for the purpose.
• An exporter can use the benefits of the RoDTEP scheme is required to declare his intention for each export item in the shipping bill or bill of exports.
• The RoDTEP will be allowed to specified conditions, exclusions, ineligibilities, non-fulfillment of requirements, and restrictions as will be notified by the MInistry of Finance.
• This scheme replaced the Merchandise Export from India Scheme (MEIS) last year.
• This is because MEIS was not up to the rules of the World Trade Organisation.
• When the US complained, a dispute settlement panel ruled against India’s use of MEIS.
• It showed that the duty credit scrips awarded under the scheme to be inconsistent with the WTO norms.
• Under the RoDTEP scheme, a refund will be made on the exporters at the central, state, and local duties or taxes that were not being rebated or refunded.
• The exporter will get the refund credited to the ledger account that is with the customs department.
• The exporter can use the credited refund to pay Basic Customs duty on imported goods.
• The credits under this scheme can also be transferred to other importers.
• Due to the resource crunch, the notification of rates may delay.

Conclusion

The move to extend RoDTEP Scheme to all export goods comes at a time the country is recovering from one of the worst economic downturns in the recent past. It will give immense confidence to businesses to start producing export-oriented goods. But, it remains to be seen whether we can see a spike in exports as a majority of the nations are still reeling under the COVID-19 pandemic and their economies are yet to take flight.