Exporters fret over delay in rebate rates

#GS3 #ECONOMY #TAXATION AND EXPORT 

Context

● Even as exporters fret over an inordinate delay in notification of the rates under a new WTO-compliant scheme for rebating taxes and duties to the export sector, they are also seeking greater clarity from the government on some grey areas in the scheme’s functioning, according to tax consultancy firm RSM Astute.

EXCERPTS 

Remission of Duties or Taxes on Export Product (RoDTEP)

Remission of Duties or Taxes on Export Product (RoDTEP)

  • The scheme was announced in 2020 as a replacement for the Merchandise Export from India Scheme (MEIS), which was not compliant with the rules of the World Trade Organisation.
  •  Following a complaint by the US, a dispute settlement panel had ruled against India’s use of MEIS as it had found the duty credit scrips awarded under the scheme to be inconsistent with WTO norms.
  •  The RoDTEP scheme would refund to exporters the embedded central, state and local duties or taxes that were so far not being rebated or refunded and were, therefore, placing India’s exports at a disadvantage.

Significance

  •  Indian exporters will be able to meet the international standards for exports as affordable testing and certification will be made available to exporters within the country instead of relying on international organizations.
  • Also under it, tax assessment is set to become fully automatic for exporters. Businesses will get access to their refunds for GST via an automatic refund-route.
  •  This would increase the economy for the country and working capital for the enterprise.

Extension RoDTEP Scheme

  •  Recently, the Government has decided to extend the benefit of the Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) to all export goods.
  • The government has decided to extend the benefits of the RoDTEP to all export goods starting 1st january 2021.
  •  Initially, the scheme was expected to be limited to around three sectors to start with due to limited resources.
  •  The rates under this scheme, which are expected to be notified soon, will be applicable from 1st january 2021 to all eligible exports of goods.

 Reason for Extension

  • It will boost the export sector of the country.
  •  So far refunds were not taking place, adversely impacting exports.
  •  India's exports fell 8.74% in November, steeper than 5.12% dip in October.

NEWS INFO 

Very near future’

● The rates under the RoDTEP (Remission of Duties and Taxes on Export Products) scheme, which came into effect on January 1, would be notified in the ‘very, very near future’.

● Exporters have been urging the government to lift the uncertainty over the benefits that would accrue to them under the scheme, as they are it finding it difficult to price fresh global orders in the absence of the crucial information especially in sectors with thin margins.

● The trade and industry is hopeful that the scheme’s operation would be smooth, and concerns would be addressed in the early stages of operationalisation.

● Due to COVID-19, India’s exports may require more stimulus and the exporters hope that RoDTEP would not be an impediment to their business plans.

Grey areas

● The consultancy flagged the power given to Customs officers to suspend the scrips or refund credits or even to bar exporters from utilising these scrips especially as the grounds on which such suspensions could be done have not been spelt out.

● As per government statements, the refund of taxes on exports would be credited to exporters’ ledger account with the Customs department, which could be utilised to pay basic customs duty on imported goods.

● Clarity would be required whether the refund could be utilised to pay other taxes on imported goods such as IGST and Social Welfare Surcharge.

● Under the MEIS scheme, which RODTEP has replaced, these refund credits could be used to pay customs duty, additional customs duty (with some exceptions) as well as central excise duties.

● The delay in operationalising the scheme is affecting the exporters by restricting their ability to price products competitively and the uncertainty was making it harder to finalise contracts.

SOURCE: THE HINDU 

 

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