RoDTEP Scheme

The Government of India recently announced that the benefits of RoDTEP (Remission of Duties and Taxes on Exported Products) scheme is to be extended to all goods.

What is RoDTEP Scheme?

The RoDTEP Scheme was launched in 2020 to boost exports of India in International markets. Under the scheme, a mechanism will be created for reimbursement of levies, taxes or duties at central, state and local levels. Prior to the scheme, the reimbursements were not done under any mechanism.

Which scheme was replaced by RoDTEP Scheme?

Merchandise Exports from India Scheme (MEIS). It was introduced to offset infrastructural inefficiencies and associated costs involved in exporting goods that are produced in India.

Why was Merchandise Exports from India Scheme (MEIS) replaced with RoDTEP Scheme?

The MEIS was not WTO-compliant.

How is RoDTEP Scheme WTO-compliant?

The RoDTEP Scheme will coordinate with the World Trade Organization to reduce the post production transaction costs for the exporters. In order to achieve this, the RoDTEP Scheme implementation measures must provide production-oriented processes. This is in accordance to WTO rules. This will help to boost the production of MSMEs.

Also, under the scheme the indirect taxes are consumed in production process. This is also consistent with WTO. In simple words, according to WTO principles, indirect taxes on exports shall be reimbursed to boost the exports.

What are the benefits of RoDTEP Scheme?

Under the RoDTEP Scheme, the exporters of India will meet international standards for exports. This will boost the value of Indian products in the international market. It is being achieved through certification and affordable testing that will be provided under the scheme rather than relying on international organizations.

By replacing MEIS, the RoDTEP Scheme created an automated route for the Input Tax Credit. The Input Tax Credit is provided to set off the taxes paid on purchase of consumables, raw materials that are used in the manufacturing goods and services. Therefore, it helps to avoid double taxation.

Month: Current Affairs - January, 2021