Present status of RoDTEP and immediate next steps for exporters
The current Merchandise Export Incentive Scheme (‘MEIS’) is in vogue only till December 2020. Thereafter, exporters will be granted benefit under new scheme viz. Remission of Duties and Taxes on Exported Products Scheme (‘RoDTEP’).
Vide the present update, we wish to apprise you on present status of RoDTEP and immediate next steps for exporters intending to avail benefit thereunder.
Salient features of RoDTEP are as under:
- RoDTEP will compensate exporters with respect to Indirect Taxes and Duties incurred in manufacturing export products which are presently not credited / reimbursed under any Scheme. RoDTEP will be compliant with WTO’s Subsidies and Countervailing Measures Agreement.
- Following taxes / duties / levies will be compensated under RoDTEP:
- VAT and Excise duty paid on fuel;
- Electricity duty;
- Mandi tax;
- Stamp duty; and
- Embedded GST where no ITC is available
- RoDTEP will be over and above existing benefits of Duty Drawback, Advance Authorisation, EPCG and GST refund.
- RoDTEP will be granted as percentage of FOB value of export goods (like Duty Drawback and MEIS).
- RoDTEP will be granted in form of transferable scrips in Electronic Ledger of exporters.
Way forward for exporters
A formal legislative framework of RoDTEP detailing eligible categories and rates at which benefit will be available, is awaited. Government has constituted RoDTEP Committee which is undertaking inter-alia task of determination of rates at which benefit will be granted.
In the interregnum, CBIC vide document bearing File No. 605/22/2020-DBK/862-932 dated August 10, 2020 (‘CBIC letter’) has sought product wise data from Export Promotion Councils, Trade Industry Associations and Chambers of Commerce to provide data of aforesaid tax costs by August 24, 2020. The data is required to be submitted in specified formats i.e. Form R1, R2 and R3 appended to CBIC letter.
Vide CBIC letter, exporters are asked to submit onerous data in the requisite formats in a limited time frame. While submitting data, exporters need to explain cost of their product and highlight tax costs which need to be reckoned while fixation of rates.
Exporters should submit details of tax costs (direct and hidden) like:
- Taxes on fuels in case of FOR or CIF procurements, built in purchase cost
- Taxes incurred by power generation and distribution companies, built in power cost
- Taxes at job-workers’ end, built in job-work charges
- Taxes on fuel for employee transportation, built in transportation cost
Notably, as per CBIC letter last date for submitting data has lapsed. However, we understand that Government is still accepting data on behalf exporters. Accordingly, exporters should act timely and submit such data at the earliest. Considering complexity, exporters can also consider seeking professional help for data collation.
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