The RoDTEP scheme is a newly designed plan initiated by the Indian Government to better assist exporters. RoDTEP full form is Remission of Duties and Taxes on Exported Products. On January 1, 2021, the day it was first officially confirmed in the press, this plan replaced the pre-existing MEIS scheme. The MEIS full form is Merchandise Exports from India 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 RoDTEP India is very beneficial for small and medium-sized businesses in terms of ease of exports and recuperates the import substitution funds. The RoDTEP scheme for MSMEs is thus one step towards strengthening the small and medium enterprises of India. The scheme is also beneficial for exporters because it extends the time to clear RoDTEP scheme documentation 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.
This is a comprehensive guide on the RoDTEP scheme for exporters and the various RoDTEP guidelines issued by the government of India. Read on to benefit from the scheme if your business meets RoDTEP scheme eligibility criteria.
What is the RoDTEP Scheme?
RoDTEP full form is Remission of Duties and Taxes on Export Products.
RoDTEP India was officially launched 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. In the sections ahead, we have explained all about RoDTEP scheme documentation required, benefits, significance and also the RoDTEP scheme application process.
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.
Features of the RoDTEP Scheme
The RoDTEP scheme is a flagship initiative by the Indian government to boost exports by reimbursing previous non-refundable taxes and levies. Some of the striking RoDTEP scheme features are listed below. Read on to know more about the scheme:
- Refund of Non-Refundable Duties: The RoDTEP scheme allows exports to claim a refund of various previous non-refundable duties and taxes, such as Mandi tax, VAT, Coal cess, and Central Excise duty on fuel. All taxes under the MEIS and RoSTCL schemes are now included in the RoDTEP scheme.
- Automated System of Credit: The RoDTEP benefit is issued in the form of electronic scrips or e scrips. These RoDTEP scrips or credits are tracked and maintained through a digital ledger system, ensuring smooth and efficient transactions. The electronic system reduces paperwork and makes it easier for exporters to manage their credits.
- Electronic Scrip: Unlike the previous schemes that issued physical transferable scrips, the RoDTEP scheme issues electronic scrips or RoDTEP licenses, which can be used to pay applicable custom duties, IGST, or can be transferred to others, adding flexibility to the process.
- Product-Based Rebate: Each export product has a rate of RoDTEP based on its HSN code. As per its rate list, specifying the rebate percentage should be done on applicable products. The rebate is granted on the FOB value of the goods exported, which excludes insurance and freight charges.
- Quick Verification through Digitization: The introduction of a digital platform helps expedite the clearance process. Exporters can track their claims via the ICEGATE portal. The digital process uses a risk management system for verification, ensuring fast and accurate processing of transactions. The RoDTEP script is issued directly to the exporter’s credit ledger upon verification.
- Multi-Sector Scheme: The RoDTEP scheme benefits all sectors, including the textile sector, ensuring a broad approach. RoDTEP rates are announced for various product categories, with a dedicated committee deciding the sequences of benefits across different industries. This makes it a multi-sector export incentive program that covers a wide range of products.
- WTO Compliance: One of the main features of this scheme is that it is compliant with the WTO regulations, unlike earlier schemes such as MEIS that were challenged by the US. This export incentive scheme ensures that India’s export subsidy programs are in line with international trade norms.
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.
Eligibility to Obtain Benefits of the RoDETP Scheme
The government of India has laid down specific criteria for RoDTEP eligibility to ensure only genuine exporters benefit from the scheme. Here we have explained the eligibility criteria for RoDTEP benefits:
- Eligible Exporters: Both manufacturer exporters and merchant exporters (traders) are eligible for RoDTEP benefits. Special Economic Zone (SEZ) and Export Oriented Units (EOUs) also qualify for benefits under the RoDTEP scheme. There are no specific turnover limits to claim benefits under the RoDTEP scheme for SEZ units and EOUs. However, before claiming, make sure to check your eligibility for the RoDTEP scheme for EOUs and SEZs.
- Eligible Products: Exported goods need to have India as the country of origin for quality. Products exported via courier services or through e-commerce platforms are also eligible under the scheme, provided they meet the necessary conditions set by the DGFT notification.
- No Re-Export Eligibility: Goods that are re-exported are not eligible under the RoDTEP scheme. Only products that are directly exported from India are eligible for the benefits.
- Declaration on Shipping Bill: To claim the RoDTEP benefit, exporters must declare on their shipping bill that they wish to claim the incentive. This declaration triggers the processing of eligible claims for rebate.
- No Upper Limit on Claims: Exporters can claim RoDTEP rebates without any turnover cap. However, there are value caps per unit in the RoDTEP scheme product list and specified by the RoDTEP scheme rates.
To successfully claim rebates, it is essential to comply with the norms. For most goods exporters the RoDTEP benefit is available. Check RoDTEP eligibility today to know if you meet the documentation and criteria for the benefit.
What Are The Benefits Of RoDTEP?
There are several benefits that exporters can avail through the RoDTEP scheme. Some of the highlighting RoDTEP scheme benefits for exporters are listed below:
- 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 RoDTEP refund process 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.
How to Claim RoDTEP?
Wondering how to apply for RoDTEP scheme? Well, RoDTEP scheme application is not a tough task. You can easily claim the benefit with the simple process.
Follow these step-by-step processes to claim RoDTEP:
- Declaration on Shipping Bill: To begin, exporters must declare on their shipping bill that they are claiming RoDTEP benefits. This is mandatory for the processing of eligible shipments.
- Process through ICEGATE: Once the shipping bill is processed, the exporter must submit the Gateway Export General Manifest (EGM) to the ICEGATE portal. The RoDTEP scrip will be issued and linked to the exporter’s credit ledger account.
- Creating RoDTEP Ledger: If the exporter has an IEC code and is registered with ICEGATE using a Digital Signature Certificate (DSC), they can create a RoDTEP credit ledger on the portal to receive duty credits.
- Generating the Scrip: Once the exporter’s shipping bills are processed, they can log in to ICEGATE, select the relevant bills, and generate their RODTEP scrip to claim the rebate.
How to Calculate RoDTEP Amount?
As you may be aware, ICEGATE portal is the official portal for RoDTEP benefits. You can easily calculate to check the refund you are eligible for. Below we have explained the formula with the help of an example:
- Identify the RoDTEP Rates: Refer to the RoDTEP scheme rates list to find the percentage applicable to the product category based on the HSN code.
- Determine the FOB Value: The FOB value refers to the value of the goods at the port of shipment, excluding insurance and freight charges.
- Calculate RoDTEP Benefit: Multiply the FOB value by the RoDTEP rate to determine the RoDTEP amount.
Formula: RoDTEP Benefit = FOB Value x RoDTEP Percentage Rate
Example: If the FOB value is Rs. 1,00,000 and the applicable RoDTEP rate is 2%, the RoDTEP benefit would be Rs. 2,000.
- Verify on ICEGATE: To ensure the accuracy of your claims, the RoDTEP incentive can be checked online on the ICEGATE portal.
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 MEIS vs RoDTEP 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.
Conclusion
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.
FAQs
1. What is the objective of RoDTEP?
2. What are the excluded sectors from the RoDTEP scheme?
3. Who is eligible to take the benefit of the RoDTEP scheme?
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