RoDTEP Scheme: Rates, Notifications and Benefits
The vision of the government of India, Atmanirbhar Bharat – a self-reliant India, includes building a robust ecosystem to support Indian exporters.
The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme is a promising initiative in this direction. It was launched on 01st January 2021 to empower exporters and replace the Merchandise Exports from India Scheme (MEIS) to comply more with the World Trade Organization (WTO) norms.
There are multiple aspects to know about RoDTEP which we have covered in detail in this blog.
What is the RoDTEP scheme?
The RoDTEP scheme refunds the amount spent on taxes and duties by exporters. These taxes and duties are levied by the local, state, and central governments and were otherwise not refundable by any other scheme. The refund amount is calculated as a specific percentage of the Free On Board (FOB) value of the product or a fixed amount based on the per unit of measurement.
Consider this very simple example. Consider you run a company that exports T-shirts from India. So while making those T-shirts, you may have to pay the following taxes:
Electricity tax: ₹10
Fuel tax for transport: ₹5
Local municipal tax: ₹3
Now, these taxes aren't refunded under GST. With the RoDTEP Scheme, the government gives a refund (say ₹18 in this case) to cover these hidden taxes. This makes exports competitive in international markets by reducing costs.
So, the exporter gets a credit or refund which they can use to reduce future taxes or transfer to someone else.
What are the Features of the RoDTEP Scheme?
The RoDTEP scheme offers two-fold benefits to the exporters: it solves critical bottlenecks in the export trade and enhances India’s competitiveness in the global arena. Here are the main features of the scheme that make it possible:
Refund of Previously Non-Refundable Taxes and Duties
Under MEIS, costs like VAT on fuel, mandi taxes, and electricity duties were non-refundable. RoDTEP rebates all of the above and other embedded costs to zero-rate exports. This decreases the tax burden on exporters and encourages them to sell products internationally.
Automated and Digitized Process
The process to apply and receive a rebate under the RoDTEP scheme is automated and digitized from start to end. The exporter must log in to their ICEGATE account which is a hub for all electronic transactions between the exporters and the customs department. After logging, they fill out the application form and attach documents like the shipping bill and Electronic Bank Realisation Certificate (eBRC). The refund is credited in the form of electronic scrips which exporters can track through an electronic ledger maintained by the Central Board of Indirect Taxes and Customs (CBIC)
Wide Coverage Across Sectors
RoDTEP covers a broad range of sectors like gems and jewellery, automobiles, plastic, marine, agriculture, and electronics. In total, it covers 8,555 tariff lines – a product as defined in the list of tariff rates.
Inclusion of Various Export Entities
To support Small and Medium Companies (SMEs) and boost labour-intensive sectors like textiles, the RoDTEP scheme includes various export entities. These include Domestic Tariff Areas (DTA), Export Oriented Units (EOU), and Special Economic Zones (SEZs).
Who Can Claim Benefits Under the RoDTEP Scheme?
The RoDTEP scheme is available to exporters from various sectors and industries. Here’s a list to help you understand who can claim benefits under this scheme:
- Exporters from all sectors are eligible under the RoDTEP scheme. But the ones from the textile industry are given more priority
- Large manufacturers and traders both are eligible to benefit from this scheme
- There is no turnover threshold under the RoDTEP scheme. This is specifically advantageous for small and medium businesses as they could freely participate without financial gatekeeping
- Exporting goods that were imported to India from other countries are not eligible under this scheme
- To claim rebates under RoDTEP, the documentation must clearly mention the country of origin as India
- Exporters working in the SEZ or EOU areas are also covered in this scheme. SEZs are special designated areas that enjoy different trade regulations. For example, exporters are exempt from paying customs duties and income tax for a certain time. EOU are manufacturing units established to export the entire production or a large portion of it.
- E-commerce business owners who have sent their products to international clients via courier can also benefit from tax remissions
- Service exporters are not covered for benefits under the RoDTEP scheme. The Service Exports from India Scheme (SEIS) is the the right program under which they can claim benefits. SEIS offers duty credit scrips to service exporters to use them to pay various taxes and duties
Which taxes will be Incorporated Into the RoDTEP scheme?
Here is a list of taxes compensated under the RoDTEP scheme:
- Central Excise Duty on Fuel: This includes the excise levied on fuels such as petrol, diesel, and natural gas during the production and transportation of goods
- Mandi Tax: This is a form of local tax imposed on agricultural products in small market areas called Mandis. The RoDTEP scheme remits this cost to support the agricultural exporters
- Coal Cess: The tax levied on coal production is remissioned under this scheme. The intention is to lower the cost for industries dependent on coal as an energy source
- Electricity Duty: This is a huge relief for industries depending on high energy consumption for daily production. Covering the duty reduces production costs making it more favourable for the industries to export their goods
- State Goods and Service Tax (SGST) and Central States and Service Tax (CGST): Refund is available for embedded SGST and CGST paid for pesticides and fertilizers used in agricultural production. It also covers other sectors like food and beverages, rent-a-cab, and works contract services.
- Stamp Duty on Export Documentation: Any stamp duty paid for export-related documentation is refunded to the exporter to reduce their administrative costs.
- Local Taxes and Levies: Any other form of local tax borne by the exporter and not covered under any other scheme is eligible for remission under RoDTEP
How can you claim benefits under the RoDTEP Scheme?
Here is a step-by-step process you must follow to claim benefits under the RoDTEP scheme:
Export Declaration
When you are filing the shipping bills, it’s mandatory to make a declaration to claim benefits under the RoDTEP scheme. You can do that by adding a specific code like RoDTEPY to the shipping bill
Electronic Platform Registration
Register to the ICEGATE portal using a Digital Signature Certificate (DSC). This account will be useful for managing all claims and transactions under the RoDTEP scheme
Entry of Goods
Before you submit the details, take a moment to verify if the goods are eligible under the RoDTEP scheme. Also, check if the information is accurately captured in the application form
Export Verification
The customs officials will verify the details in the form and approve the claim for eligible goods if everything is right
Issuance of RoDTEP Credits
On successful verification, the customs officials will generate a scroll containing the calculated benefit amount which will be made available to your ICEGATE account. Using these scrolls you can create electronic scrips
Utilization of e-Scrips
You can use the electronic scrips to pay for basic custom duties or transfer to other importers
What Documents Do You Need to Claim Benefits Under the RoDTEP Scheme?
Here are the documents you need to keep in handy to claim rebates for the duties and taxes paid by you during the export:
Shipping Bills
This is one of the most important documents to claim benefits under the RoDTEP scheme. Submit copies of all the shipping bills related to the export including the claim declaration
Export Invoice
An export invoice is a document that contains the product details like name, description, rate, and the Free On Board (FOB) value
Packing list
Packing list mentions product details like description and quantity. This document is needed because the customs officials use it to verify what has been exported
Bank Realisation Certificate
A Bank Realisation Certificate (BRC) is proof that you have received the payment from the buyer in exchange for the goods exported
Bill of Lading/ Airway Bill
The bill of lading is useful when you transport the goods via sea freight. The airway bill is for air freight. Both the bills are useful to prove the goods were dispatched
Export Promotion Copy of Shipping Bill
If the nature of goods makes them eligible to make claims under different schemes including RoDTEP, then this document must be retained
Electronic Data Interchange (EDI) Registration
It’s important to show the ICEGATE registration to facilitate the electronic communication between you and customs authorities
Self-Declaration Form
This form requires the exporter to declare that they adhere to the RoDTEP guidelines and eligibility criteria
GST Returns (if applicable)
This is not mandatory, but if it’s applicable, then the exporter must produce GST returns to prove compliance with tax rules related to their exports
Letter of Undertaking (if applicable)
This is also conditional and only applies to exporters who are eligible under GST but don’t have to pay IGST
Receive Seamless Export Payments with Skydo
The RoDTEP scheme proves the commitment of the Indian government to simplify international trade for exporters. Skydo is a platform that simplifies international payments for exporters.
Skydo offers a smart, fast, and affordable solution for exporters with low fees and no hidden charges. With Skydo’s instant Foreign Inward Remittance Advice (FIRA), you don’t have to worry about documentation and focus solely on growing your business.
Join the community of exporters who trust Skydo for international payments. Sign up now.
How are RoDTEP refunds calculated?
RoDTEP refunds are calculated as a percentage of the Freight On Board (FOB) value of the exported goods. Either the declared FOB or 1.5 times the market price of the goods, whichever is lower is considered.
What documents are required to claim RoDTEP benefits?
How do I claim RoDTEP benefits?
