How & when will RoDTEP replace MEIS?

Just couple of days before lockdown was announced, the Cabinet has approved WTO compliant scheme for “Remission of Duties and Taxes on Exported Products (RoDTEP)” to boost exports for enhancing Exports to International Markets.

There has been lot of apprehensions in the industry about the new scheme – RoDTEP, which is going to replace MEIS. So let us understand quickly, the W’s & H’s of RoDTEP scheme.

#Objective of RoDTEP scheme

To make Indian exports cost competitive and create a level playing field for exporters in International market.

# What is RoDTEP scheme?

This scheme will reimburse taxes/duties/levies at the central, state and local level, which are currently notbeing refunded. Also this scheme is in compliance with WTO guidelines.

# In which form the benefit will be given?

Refund under the Scheme, in the form of transferable duty credit/electronic scrip will be issued to the exporters, which will be maintained in an electronic ledger.

# On what value rebate would be applied?

The rebate would be claimed as a percentage (%) of the Freight On Board (FOB) value of exports.

The remissions under the RoDTEP scheme would be a step towards “zero-rating” of exports, along with refunds such as Drawback and IGST.

# Will RoDTEP replace MEIS? If yes, when?

Yes this new scheme will replace MEIS. Items will be shifted in a phased manner from existing scheme MEIS to RoDTEP with proper monitoring.

It is very clearly clarified by DGFT that - Benefits under MEIS will be available only upto 31.12.2020. Prior to 31.12.2020, if any item is covered under RoDTEP, it would be at the same time removed from MEIS.

# What are the State and Central Levies and Taxes which are yet not refunded by the Government?

At present, GST taxes and import/customs duties for inputs required to manufacture exported products are either exempted or refunded. However, certain taxes/duties/levies are outside GST, and are not refunded for exports, such as, VAT on fuel used in transportation, Mandi tax, Duty on electricity used during manufacturing etc. These would be covered for reimbursement under the RoDTEP Scheme.

However, the moot question here is can refund under RoDTEP be adequate to compensate rewards under MEIS, when the reward/refund determining mechanism under both the schemes are very different : MEIS - for promoting manufacture & export of notified products, whilst under RoDTEP - for compensation of tax costs.

To know about more about what’s major missing under RoDTEP scheme & whether it can adequately compensate existing schemes, stay tuned for our next blog.

To know further about EXIM related matters, feel free to get in touch with us through e-mail id – info@bizbrains.in or at +91 (79) 4890 7720 / (+91) 94280 79020.