All you need to know to understand RoDTEP

Summary

  • The rates of the RoDTEP Scheme were announced on 17th August 2021. 
  • The rates range from 0.5% to 4.3% depending on the exported product.
  • Rates were announced for 8555 tariff lines.
  • The customs will execute RoDTEP. Rebates will be issued in the form of e-scrips.

Much to the relief of Indian exporters, the government announced the awaited tariff rates for RoDTEP on 17th August 2021.RoDTEP stands for Remission of Duties and Taxes on exported products. The centre had introduced this scheme in January 2021 to replace the previous MEIS (Merchandise Exports from India Scheme).On 17th August 2021, the government declared rates for 8555 tariff lines. From the time of the announcement, the reactions amongst the exporters are mixed. They seem to be a relief for some, while some others have many questions and disappointment in their minds. Many expressed that the rates of RoDTEP are lower than expected, and they generally range from 0.5% to 4.3%.  

The idea behind RoDTEP

The purpose of the scheme is to boost exports by providing refunds of taxes to exporters. With these, more sellers would be encouraged to export by making the most of these incentives. The whole idea behind the RoDTEP scheme is that people should not require to ship at a higher price because of the taxes and duties. Exported products should be tax-free to compete with the prices of other products in the global markets. If the government remits the already charged taxes, more sellers would want to join in the league and boost exports.

The objectives of RoDTEP include

  1. Refund the already charged taxes and duties on the exported goods, even the prior stage cumulative indirect taxes collected at any production stage.
  2. Refund of all such indirect taxes and duties incurred in the distribution of the exported products.

This refund will not be applicable on duties and taxes that are already exempted or credited.

Eligible exporters will get a rebate at notified rates as a percentage of Freight on Board (FOB). For some, it will.

How will RoDTEP be executed?

The Customs will execute the RoDTEP with the help of an electronic system. The rebate or the remission will be as an electronic e-scrip or a transferable credit. The Central Board of Indirect taxes and Customs (CBIC) will maintain an electronic record of this in an electronic ledger. The value cap per unit will also affect the available rebate for certain exported products. 

The sectors that seem to benefit from RoDTEP

RoDTEP seems to encourage domestic industries by helping them to serve in the international markets at competitive prices. The sectors that get support in this scheme include Agriculture, Leather, Jewellery, Gems, Marine, Electrical/ electronic Machinery,  Plastic, Automobile and Textile. Click here to view the notification by the government.

Avalara helps businesses of all sizes in getting their tax compliance right. Our cross border solutions have helped many sellers in selling seamlessly across international borders. Our sales tax solution covers compliance for more than 60 countries. Visit our website to know more about the products we offer. 

We keep posting about changing tax regulations that might affect your business. Read more about the recent EU VAT reforms here.

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