Government Develops Mechanism to Verify Exporter Tax Refunds Under RoDTEP Scheme
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| Government Develops Mechanism |
The Finance Ministry, in collaboration with the Commerce and Industry Ministry, is establishing a robust institutional mechanism to verify tax refunds provided to exporters under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme. This initiative aims to prevent the imposition of countervailing duties (CVDs) by major importing countries, including the European Union and the United States, according to a senior government official.
The necessity for this mechanism arose after the US and EU imposed CVDs on specific Indian exports, such as paper file folders, common alloy aluminium sheets, and forged steel fluid end blocks, following anti-subsidy investigations. CVDs are tariffs levied on imports to neutralize subsidies provided by the exporting country’s government, thus protecting domestic industries.
The call for a new verification method was driven by the US's request for transparency in India's verification process of RoDTEP rates granted to exporters. The RoDTEP rates are determined by the commerce ministry, following recommendations from a committee led by former Commerce and Home Secretary GK Pillai.
"Consequently, we must implement an official mechanism to confirm that the rates granted to exporters correspond to the actual duties paid," explained the official.
The commerce ministry is actively collaborating with the Department of Revenue (DoR) to establish a comprehensive verification mechanism for RoDTEP rates. This process will involve the creation of standardized formats and the deployment of verification teams at the field level. Specifics regarding team composition and operational guidelines are currently under development. The Directorate General of Trade Remedies (DGTR) will also play a key role in this joint system.
Launched in January 2021, the RoDTEP scheme refunds embedded duties and taxes, such as VAT on transportation fuel, mandi tax, and electricity duty. It replaced the Merchandise Exports from India Scheme (MEIS), which was deemed incompatible with WTO rules and faced numerous challenges from WTO members.
The RoDTEP scheme operates within a specified budget, with Rs 15,070 crore allocated for FY 23-24. This funding aims to boost exports of pharmaceuticals, organic and inorganic chemicals, iron and steel products, and other key items.
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