In response to anti-subsidy measures in the United States and the European Union, the central government is considering a substantial redesign of the Remission of Duties and Taxes on Exported Products ( RoDTEP ) system. This initiative aims to establish a robust verification mechanism for efficiently processing refunds.
The current challenges arose from exporters categorising the RoDTEP scheme as an “incentive,” a characterization vehemently refuted by the government. Officials clarified that RoDTEP, implemented three years ago, exclusively intended to refund taxes and levies paid by exporters. This approach aligns with the global standard of shipping goods without incurring duties, replacing the non-compliant Merchandise Exports from India Scheme ( MEIS ) based on World Trade Organization ( WTO ) guidelines, reported TOI.
Discussions with European and American authorities raised concerns about exporters potentially receiving duty refunds exceeding their actual payments. In response, the government is actively exploring mechanisms to verify exporter claims and payments, ensuring a balanced approach to avoid imposing undue burdens on businesses.
Recognizing the potential for misuse, the commerce department is working on implementing a foolproof system. However, officials acknowledge the inherent challenges of administering such a system, particularly in the services sector involving overseas branches and related parties.
Remission of Duties and Taxes on Exported Products (RoDTEP)
The Remission of Duties and Taxes on Exported Products ( RoDTEP ) scheme, initiated by the Department of Commerce from January 1, 2021, serves as a means to provide rebates on various Central, State, and local duties, taxes, and levies. These are expenses not refunded under other duty remission schemes.
Administered by the Department of Revenue ( DoR ), the scheme issues the remission amount in the form of a transferable duty credit electronic scrip. This electronic scrip is maintained in an electronic ledger within the Customs system.
The implementation guidelines for the scheme were officially notified through Notification No. 24/2023-Customs (N.T.) on April 1, 2023. This notification outlines the procedures for issuing duty credit under the RoDTEP scheme, along with the associated conditions and restrictions governing its issuance.
Duty credits granted under the RoDTEP scheme are contingent upon the realisation of sale proceeds within the timeframe prescribed by the Reserve Bank of India ( RBI ). Additionally, the Export Declaration Control License (EDCL) Regulations, in conjunction with the aforementioned notification, outline the scenarios and procedures for the suspension or cancellation of duty credit or e-scrip. This includes recovery measures in cases where the duty credit granted exceeds the permissible limit or when export proceeds are not realised.
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