The Central government is looking to identify key sectors for priority implementation of the new Remission of Duties or Taxes on Export Product (RoDTEP) scheme.
The scheme aims at refunding exporters indirect taxes paid on inputs, and will also replace the popular Merchandise Export from India Scheme (MEIS) that is incompatible with the World Trade Organization norms.
The RoDTEP scheme will be available for all export items, but the process of data collection for fixing rates is laborious and time-consuming. That is why the scheme may be extended to a few priority sectors first and then subsequently to the rest of the items.
The RoDTEP committee, set up by the Centre in July 2020 to work out the modalities for the new scheme, is in touch with the Ministry on the items that could be of priority and should be focussed on first.
Whether the priority list will be drawn on the basis of export value or incidence of indirect taxes, including embedded taxes on various sectors, is to be seen.
The Centre plans to withdraw MEIS, which has been ruled as being in violation of multilateral trade rules by WTO, at the end of 2020, and items that currently enjoy benefits under it will instead benefit under the RoDTEP scheme.
The new scheme also seeks to reimburse embedded taxes on purchases from main vendors, embedded GST on purchase from unregistered dealers, etc.
The government has already replaced MEIS with another scheme known as the Rebate of State and Central Taxes and Levies on Export of Garments and Made-ups (RoSCTL) for garments and made-ups as textiles was the first sector to be declared ineligible for MEIS by WTO.