Rebate of State and Central Taxes and Levies (RoSCTL)

Rebate of State and Central Taxes and Levies (RoSCTL)

Subject – Economy

Context – At $37.29 billion, December export shit the highest ever in a month

Concept –

• Announced on 7th March, 2019, RoSCTL was offered for embedded state and central duties and taxes that are not refunded through Goods and Services Tax (GST). It was available only for garments and made ups. It was introduced by the Ministry of Textiles.
• Garment exporters will continue to get a rebate on Central and State taxes on their outward shipments as the government on Wednesday approved extension of RoSCTL scheme till March 2024.
• The sectors covered under this scheme (apparel/garments and made-ups) would not get benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme.
• However, textiles products which are not covered under the RoSCTL would be eligible to avail the benefits, if any, under RoDTEP along with other products as finalised by the Department of Commerce.
• The scheme will be implemented by the Department of Revenue with end-to-end digitisation for issuance of transferrable Duty Credit Scrip, which will be maintained in an electronic ledger in the customs system.
• Under this scheme, exporters are issued a Duty Credit Scrip for the value of embedded taxes and levies contained in the exported product. Exporters can use this scrip to pay basic customs duty for the import of equipment, machinery or any other input.
• These scrips are tradeable. So, if the exporter does not need this for his personal use, he can transfer the same to any other importer.

RoDTEP Scheme

The government on 13th March, 2020 approved RoDTEP, a scheme for exporters to reimburse taxes and duties paid by them such as value added tax, coal cess, mandi tax, electricity duties and fuel used for transportation, which are not getting exempted or refunded under any other existing mechanism.

• RoDTEP replaces the Merchandise Export from India Scheme (MEIS) that was found to violate the World Trade Organization Rules.

To know more about RoDTEP, please refer August 2021 DPN.

Interest equalisation scheme (IES)

• Interest equalisation scheme (IES) or also known as interest subvention.
• This scheme is typically used to encourage exporters – particularly from the SME sector.
• Since the cost of capital can vary across countries, WTO allows a high interest country to provide some level of help to the exporters who would be competing with their counterparts from low interest countries.
• In simple terms, this can be called an export subsidy.