Tax reimbursement scheme for exporters moves one step ahead

The Cabinet on Friday approved the Remission of Duties and Taxes on Exported

Products (RoDTEP) scheme, which was announced by the finance minister in September last year. The scheme, which will replace the Merchandise Exports from India Scheme (MEIS), may first be rolled out for apparels and made-ups and later for other sectors, hopes the industry.

After the announcement of the scheme in September, RoDTEP has been waiting for the cabinet approval.

RoDTEP reimburses taxes such as duty on power charges, VAT on fuel in transportation, farm sector and captive power generation, mandi tax, stamp duty on export documents, CGST and compensation cess on coal in power production, central excise duty on fuel used in transportation. It would make Indian products competitive in global markets, commerce and industry minister Piyush Goyal told reporters in New Delhi.

It is not a promotional scheme like MEIS and hence is WTO-compliant. Under the WTO rules, certain duties like state taxes on power, oil, water, and education cess can be refunded.

After a WTO dispute resolution panel had ruled that MEIS was not in compliance with the global trade norms as India has graduated from the category of the least developed countries, it had to be withdrawn for apparels and made-ups by March 31, 2020. "As the data required to fix the rates under RoDTEP is already available for apparels and madeups, government might introduce the scheme for these products by April 1. For the other sectors, the scheme might get rolled out in a phased manner,' said Ajay Sahai, director general and CEO of Federation of Indian Export Organisations.

According to Goyal, the government will fix the rates by talking to the industry within eight months. "Stakeholders meeting will be held for fixing the rates. We will take data and see what all cost they bear. We will use the next six-eight months to talk to the industry,” he said.