RoDTEP Scheme – Benefits, Requirements For Traders & Exporters
The RoDTEP scheme, or Remission of Duties and Taxes on Exported Products, is a newly designed plan initiated by the Indian Government to better assist exporters. On January 1, 2021, the day it was first officially confirmed in the press, this plan replaced the pre-existing MEIS scheme. The scheme’s main goal is to reimburse all exporters for previously unreimbursable taxes and duties. This provides new benefits to exporters for exporting products outside of India and encourages global trade.
The scheme is very beneficial for small and medium-sized businesses in terms of ease of exports and recuperates the import substitution funds. The scheme is also beneficial for exporters because it extends the time to clear the documents from 1 month instead of 10 days now. In addition, this scheme helps save money on taxes and get a refund in case of duties on exported goods/services.
What is RoDTEP?
The scheme was officially launched on 13.01.2020 by the Government of India via a press release. The scheme is a part of the larger plan to increase trade, exports, and revenue for the government of India. The scheme came after the Modi Government doubled duty-free exports for six months (to 12 months). The scheme extends the Merchandise Exports from India (MEIS) and ROD/VAT Remission Scheme, which were previously available to exporters under different categories. But, now these are being made as one unified deal.
Significance of RoDTEP
The RoDTEP scheme was launched to increase exports and its revenue for the Government of India. This is signified by its approval by the government and registration at the Ministry of Commerce, India. The scheme has been introduced to replace the MEIS and VAT Remission Scheme, which exporters use on a small scale. The new system will allow exporters to claim their export-related tax benefits more efficiently and on a much larger scale, thus promoting trade conveniently.
Requirements of the RoDTEP Scheme
To take advantage of the RoDTEP scheme, a couple of requirements must be met. To begin, exporters who wish to participate in the RoDTEP scheme must own a vessel with a total capacity of approximately 5,000 DWT. Secondly, exporters must be registered under the Export and Import Policy Order 2002 regarding exports from India. Furthermore, exporters must be registered with the Indian Customs and Central Excise and Service Tax Authorities.
What Are The Benefits Of RoDTEP?
The main advantages provided by the RoDTEP are:
• The refund will be made irrespective of the value of export goods/services. Hence, this measure would encourage export from India without much financial burden on exporters.
• The procedure is easier to follow and simple.
• In the case of export goods/services with a declared value of not exceeding USD 50,000 per transaction, a full refund is given without any taxation; taxes and duties will be refunded if the claimed value exceeds USD 50,000 per transaction.
• Exporters will have to pay VAT/Taxes and duties when exporting goods/services and need not pay them during the import of capital goods.
• Tax and duty refunds will be processed within 7 days of the exporter submitting the invoice.
Need For RoDTEP
Following are the specifics of goods/services which will be eligible for deduction under the scheme:
• Exports of goods/services where a vendor’s name and invoice numbers are mentioned.
• Goods/Services purchased from and manufactured by the exporter, under manufacturing agreement or according to OEM agreement.
• Goods/services exported as part of a consignment from India.
• Any imported goods/services, if declared as export goods by an exporter before importing into India. The required documentation must show that the goods were exported within 12 months before the date on which imports are made for consumption or use in India.
• Any goods/services which were manufactured in India by the exporter under a manufacturing agreement or according to an OEM agreement.
• Import of capital goods for a project that is not export-oriented but will be directed towards exporting goods/services.
Comparison Between Rodtep And Meis (Merchandise Exports From India Scheme)
The RoDTEP scheme is a part of the larger plan to increase trade, exports, and revenue for the government of India. The scheme was launched on January 1st, 2019 after the Modi Government doubled duty-free exports for six months (to 12 months). This was an extension to two other similar schemes: MEIS and VAT Remission Scheme, which were previously available to exporters under different categorizations but are now made into one unified deal.
The scheme’s main motive is to reimburse all exporters on taxes and duties that were previously non-reimbursable. The scheme gives exporters new benefits for exporting goods and services outside India and promotes international trade.
The main difference between the RoDTEP and MEIS is that RoDTEP is a consolidated scheme while MEIS has multiple sub-categories. The consolidated plan allows exporters to take advantage of all its benefits in one shot while the other categorize them separately.
The scheme is set to give India a huge boost in terms of revenue and exports. The scheme extends the government’s plans for expanding international trade and increasing export revenue, as was exemplified during the six months of tax-free exports.
The RoDTEP scheme can help exporters create better solutions for their customers by lowering costs and increasing efficiency because they don’t have to worry about paying taxes or duties on imported capital goods.
Additionally, exporters will no longer have to pay taxes or duties on imported capital goods. This helps avoid situations where the company has to face issues due to compliance-related questions. Only one part of the manufacturing process was done in India while another part was done abroad.
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