Government Nods Scheme for Remission of Duties and Taxes on Exported Products

In line with the vision of our Hon’ble Prime Minister that each district should develop as an export hub, the Cabinet Committee of Economic Affairs on 13th March 2020 took another move and green signaled scheme for Remission of Duties and Taxes on Exported products (RoDTEP). Our Finance Minister Smt. Nirmala Sitaraman in the budget speech on February 1, 2020 proposed to digitally refund to exporters the taxes and duties levied at Central, State and local levels via the launch of this scheme this year.

Under this scheme, a mechanism would be created for reimbursement of taxes/duties which are currently not refunded but are incurred in the process of manufacture and distribution of exported products. At present, various levies such as GST, custom duties paid in the manufacture or supply of exported goods are either exempted or refunded in the garb of duty drawback and zero rated supply. However, certain levies such as VAT on fuel used in transportation, Mandi tax, Duty on electricity are not refunded under any of the existing schemes and are so covered under the RoDTEP scheme.

The scheme will be implemented in a phased manner with complete digitization. Refund under the scheme will be issued to exporters in the form of transferable duty credit/electronic slip which will be maintained in an electronic ledger. The Committee will determine the rates and items for which duties and taxes would be reimbursed. The benefits provided under existing Merchandise Exports from India Scheme (MEIS) will stand withdrawn for tariff line/items for which rates will be announced in the RoDTEP scheme.

It may be relevant here to note that in Union Budget 2020, government had also proposed to insert section 51B in Customs Act,1962 under Chapter VIIA advocating maintenance of an electronic duty credit ledger in the customs automated system. One can wonder this insertion as a precursor to RoDTEP scheme.

The scheme is intended to give boost to the domestic industry and Indian exports by providing cost competitiveness to Indian producers in International market. We are optimistic for a friendly mechanism that would pave a smooth way for successful execution of the scheme benefitting the Indian exporters in the manner envisaged.

-Team ALA

GST Law India is a blog on GST and allied commercial laws managed by members of the law firm ALA Legal.