The government has formed a committee to determine ceiling rates under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme. The panel has been tasked with evolving a mechanism for calculation of duties at the central, state and local level which are borne by exporters so that they can be refunded all the taxes paid on goods and services used in export but are currently not being reimbursed under extant mechanisms.
In March, the Cabinet had approved the RoDTEP scheme with the purpose that exporters would get the refunds in the form of transferable duty credit/electronic scrip, which will be maintained in an electronic ledger. This would ensure that exports are zero-rates, along with refunds such as drawback and IGST.
The Central Board of Indirect Taxes and Excise issued an order for formation of the committee on July 30. It would have three months to prepare its main report after identification and prioritisation of sectors and items by the government is finalised.
Among the terms of reference of the committee is the task of interacting with administrative ministries, export promotion councils, commodity boards, trade bodies and other stakeholders so as to elicit their views on the ceiling rates under the scheme.
The order said that the committee would prepare modalities for calculating taxes on exports “including prior stage cumulative indirect taxes on goods and services used in the production and of exported product and such indirect duties/taxes/levies in respect of distribution of exported product and recommend in their report the ceiling rates of RoDTEP for the items/sectors identified by the government”.
The committee would be chaired by retired former secretary to the government GK Pillai with retired CBEC members YG Parande and Gautam Ray as other members.
At present, GST taxes and import/customs duties for inputs required to manufacture exported products are either exempted or refunded. However, certain levies are outside GST, and are not refunded for exports, such as VAT on fuel used in transportation, mandi tax, duty on electricity used during manufacturing, among others. These would be covered for reimbursement under the RoDTEP Scheme.
After the cabinet approval, the government had said that the sequence of introduction of the scheme across sectors, prioritisation of the sectors to be covered, degree of benefit to be given on various items within the rates set by the committee will be decided and notified by the department of commerce.