A few ‘teething troubles’ are holding up the government from notifying the tax refund rates for the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, Commerce Secretary Anup Wadhwan has said. Addressing a press briefing on March 22, Wadhawan however stressed that exporters already broadly know what to expect from the scheme.

Going live from January 1, 2021, the RodTEP scheme is the government’s foremost export incentive scheme now after the shutdown of the erstwhile Merchandise Exports from India Scheme (MEIS). It aims to refund to exporters the embedded duties and taxes such as VAT on fuel used in transportation, Mandi tax and Duty on electricity used during manufacturing, that were so far not being refunded. While the government has clarified that the rebate would be claimed as a percentage of the Freight on Board value of exports, it is yet to bring out the specific refund rates.

However, sources say that the rates are taking longer to be finalised given that the Commerce Department is working with a smaller-than-expected budget for the scheme. In the last national budget, Finance Minister Nirmala Sitharaman announced an initial allocation of Rs 13,000 crore for the RoDTEP. In 2020, the Finance Ministry had promised an outlay of Rs 50,000 crore, along with a similar formula as MEIS.

Exporters remain particularly irked at the government for not announcing the rate of tax benefits for even a single product under RoDTEP more than three months after it went live. Remaining in the dark about the amount of government support they may receive, exporters are unable to estimate their cost of production and therefore are currently facing difficulty in taking up foreign orders.

Moreover, exporters are yet to receive at least Rs 25,000-30,000 crore worth of tax refund under the erstwhile MEIS, according to apex exporters body the Federation of Indian Export Organisations (FIEO).”This will remove uncertainty from the minds of the trade and industry thereby forging new contracts with the foreigner buyers,” FIEO President Sharad Kumar Saraf said.

Source : Financial Express