The United States WTO complaint against India led to the RoDTEP Scheme (WTO) creation. The United States claimed that India’s MEIS scheme violates WTO standards because it gives unfair advantages to Indian exporters.
Unfortunately for India, the World Trade Organization sided with the United States. To support its exporters, India was forced to abandon the MEIS system in favor of one that complied with WTO rules.
As a result, the Finance Minister indicated in her Budget Speech on February 1, 2020, that the Scheme for the Remission of taxes and duties on export products will be implemented. Accordingly, the Union Cabinet authorized the RoDTEP Scheme on March 13, 2020, and it became operational on January 1, 2021, and would continue to do so until 2025.
RoDTEP scheme: What is it?
Previously unreimbursed by any other plan, RoDTEP Scheme allows exporters to recover the cost of any applicable central, state, or municipal taxes that are incorporated in their products. Under the RoDTEP Scheme, exporters can opt for a Systematic Deposit Plan (SDP) to receive refunds of input taxes. The program would operate on the concept that levies must not be exported and instead either be exempted from or paid to exporters, with considerable effects projected within the next 5-10 years on India’s competence in international markets.
The customs service is responsible for putting into practice RoDTEP. For 8555 tariff lines, the government published RoDTEP Scheme instructions and benefit rates on August 17, 2021. Products subject to rebate requirements have a rebate rate between 0.5% and 4% of FOB value, subject to a per-unit cap.
Characteristics of the RoDTEP Scheme
Only goods and services tax (GST) and import customs duties (ICC) imposed on inputs used in the production of export goods are now excluded or refunded in some form. The GST that has already been paid can be refunded in full, plus interest and penalties, if the goods are exported after paying the appropriate duties.
Through AdvanceAuthorization or Duty Drawback, customs tariffs on imported raw materials can be waived or repaid. However, many federal and state taxes and charges remain unrefunded. It increases the selling price of the finished goods and makes Indian goods uncompetitive abroad.
Refund of paid Duties and Taxes
The purpose of the RoDTEP Scheme is to reimburse hidden levies and taxes as
- Gasoline, diesel, compressed natural gas, coal, and other fuels incur various federal and state taxes.
- Hauling export goods to the port for shipment.
- The tax imposed by the state government on industrial users of power.
- APMCs’ tax on mandis.
- The costs associated with importing and exporting, such as tolls, stamp duties, etc.
RoDTEP Program may well include all indirect Central and State taxes not refunded in any existing scheme, ensuring that the Exporters only export products and services and not any form of taxes.
The World Trade Organization-Compatible Scheme
The RoDTEP is a World Trade Organization-compliant strategy that ensures exporters’ competitiveness in the global market by providing them with tariff benefits.
Systematically Innovative Technology
The government has established several digital platforms to facilitate the export promotion scheme, which has improved the convenience of doing business. Clearance times will decrease due to the RoDTEP Scheme’s use of several digital platforms.
Under the RoDTEP Scheme, an information technology-based system for risk management would be implemented to guarantee the swiftness and precision of transaction processing. Individuals and businesses can utilize Instant Personal Loans to bridge the financial gap caused by GST input tax credit delays under the RoDTEP Scheme. The RoDTEP system expands upon the preceding scheme in several ways, including adding new sectors intended to provide consistency across the board.
Calculation of Taxes Mechanically
The RoDTEP program is working toward fully automating tax assessment to eliminate the possibility of double taxation.
Benefits of the RoDTEP Scheme and How to Apply for Them
To get financial assistance from the RoDTEP Scheme, you must complete the following four steps:
Shipping Bills Declaration
Starting on January 1, 2021, exporters must include a statement on their Shipping Bill indicating whether or not they seek to file for RoDTEP on the exported goods. RoDTEP, unlike Drawback, will not require a unique declaration of a code or serial number for its associated schedule.
Launching ICEGate Registration
The exporter must sign up for ICEGate using an email address to receive a login Id and Password. Along with a mobile phone number and an HS Code for international trade.
Building of the RoDTEP Credits Register
Benefits under RoDTEP are only available if an exporter has registered for a RoDTEP credit ledger through the ICEGate portal with a Class 3 DSC. The bookkeeping record could include the following details:
- Details about the scrolls
- Details about the scrips
- Details about the transaction
- Transfer Scrips
- Accepted Transfer of Scrips
- Formatting an Application and Making a Scroll
To apply, you’ll need a Class 3 Separate type Digital Signature Certificate and the ICEGate website (https://www.icegate.gov.in/). RoDTEP Scheme refunds may be issued as either transferable duty credits or electronic scrip recorded in a digital ledger.
As of January 1, 2021, the RoDTEP scrolls will be produced using a FIFO (First in, First Out) system.Scroll creation would be activated in stages to prevent system overload from accumulating backlogged work beginning on 01.01.2021.
Conclusion
The MEIS was replaced with the RoDTEP scheme. The prior system did not meet the requirements set forth by the World Trade Organization. Topping formation patterns can be used to identify potential trading opportunities under the RoDTEP Scheme. Motivating small exporters with tariff scrips is the goal of this program. Increased insurance protection, reduced interest charges on capital loans, and other monetary incentives will be available to exporters.
Author’s Bio:
Mr. Mehul Goyal is a professional DGFT Guru – Export House Certificate with experience of more than 30 years and specializes in the field and is offering DGFT Consulting Services all over India. Even before DGFT was instigated in the markets, he worked with many importers and exporters.