The Remission of Duties and Taxes on Exported Products (RODTEP) scheme was introduced by the Government of India to replace the earlier Merchandise Exports from India Scheme (MEIS). The RODTEP scheme came into effect on January 1, 2021. Introduction of this scheme was also a response to a ruling by the World Trade Organization (WTO) that found India’s previous export subsidy programs, including MEIS, to be non-compliant with international trade norms. By transitioning to the RODTEP scheme, India aims to comply with WTO guidelines while continuing to support its exporters.
This scheme is a significant initiative by the Government of India aimed at refunding embedded central, state and local taxes and duties that are not otherwise refunded or non-recoverable through other mechanisms, which includes; Customs Duties, Goods and Service Tax, Other Taxes – such as electricity duty, mandi tax, stamp duty, and central excise duty on petroleum products.
The scheme is not an incentive but a remission mechanism, ensuring that these taxes do not get embedded into the cost of export products, making Indian products remain competitive in international markets.
The DGFT has issued a public notice detailing the new procedures for filing the Annual RODTEP Return (ARR) on 23rd Oct 2024. This move aims to streamline the process for exporters claiming benefits under the RODTEP scheme.
The government requires details in ARR to ensure transparency and accountability in the claiming of RODTEP benefits. Accurate reporting helps in assessing the nature of inputs used in export production and the actual taxes and duties incurred. This data is crucial for periodic assessments and potential revisions of RODTEP rates.
A new para, 4.94, has been added to Chapter 4 of the Handbook of Procedures 2023. This paragraph outlines the requirements for filing the ARR. The ARR is designed to assess the nature of inputs used in export production and the actual taxes and duties incurred. Exporters claiming RODTEP benefits must file this return as per the format provided in Appendix-4RR of the Handbook of Procedures 2023.s
The ARR for RODTEP claims filed in a particular financial year must be submitted on the DGFT portal by March 31 of the following financial year. RODTEP claims for the financial year 2023-24 must be filed by March 31, 2025.
This requirement initially applies to exporters whose total RODTEP claim exceeds ₹1 crore in a financial year across all 8-digit HS Codes.
Failure to report the ARR will result in the denial of RODTEP benefits. Additionally, no further scroll out of RODTEP claims will be permitted at the Customs Port of Export after a grace period of three months, ending on June 30.
A composition fee of ₹10,000 will be charged for delayed filing of the ARR up to June 30. After this date, the fee increases to ₹20,000. Upon payment of the applicable fee, the RODTEP scrolls will resume within 45 days.
ARR filings may be periodically assessed for due diligence and presented before the RODTEP Committee for rate revisions. Certain cases may also be identified for further scrutiny based on IT-assisted risk criteria.
If excess claims are identified during scrutiny, the RODTEP scrip holder will be required to refund or surrender the excess amount. Failure to regularize excess claims within a specified timeframe will lead to the cessation of further benefits under the scheme.
The ARR format includes sections detailing the nature of inputs used in export production, the actual taxes and duties incurred, and other relevant information. Exporters must provide comprehensive data to support their RODTEP claims.
As per the DGFT user guide for ARR, If the total RoDTEP claim for a given IEC exceeds Rs. 1 crore in a financial year, filing the Annual RoDTEP Return (ARR) is mandatory. Conversely, if the total claims for a given IEC remain below Rs. 1 crore for the financial year, exporter need not require to file the ARR.
Once an exporter qualifies under the rule above, and yet none of the individual 8-digit ITC-HS codes crosses Rs. 50 lakh in RoDTEP claims, exporter may file the ARR only for the 8 digit code under which he claimed the highest amount.
For example, if your total RoDTEP claim in a year amounts to Rs. 1.2 crore—where the distribution is ;
- ITC-HS1: Rs. 20 lakh,
- ITC-HS2: Rs. 30 lakh,
- ITC-HS3: Rs. 40 lakh, and
- ITC-HS4: Rs. 30 lakh,
exporter need to file an ARR only for ITC-HS3, since it represents the highest claim.
However, after qualifying under the 1 crore rule, if any individual 8-digit ITC-HS code exceeds Rs. 50 lakh in RoDTEP, an ARR must be filed for each of those codes.
For instance, if exporters total RoDTEP claim is Rs. 1.2 crore, where the distribution is
- ITC-HS1 at Rs. 60 lakh,
- ITC-HS2 at Rs. 51 lakh,
- ITC-HS3 at Rs. 3 lakh, and
- ITC-HS4 at Rs 6 lakh,
exporters are required to file ARRs for ITC-HS1 and ITC-HS2, while they may ignore the remaining codes whose claims are below the Rs. 50 lakh thresholds.
Exporters must maintain physical or digital records substantiating the duty remission claims filed in the ARR for a period of five years. These records may be produced before the concerned authority for assessment.
Below are the sr. number wise details require to be submitted in ARR and its probable source of information.
| Sr. No. | Return Field | Details | Source of Information |
| 1 to 6 | Manufacturer/ Exporter Information | Name, Unit Type, ICE/PAN, HS code for Export product at 8 digit, UQC of product, Unit wise address with mobile number, mail id | Business registration documents, IEC (Import Export Code), PAN (Permanent Account Number), company records. |
| 7 | Export Product Details | Exact description of the product as per Shipping bill(s) | Shipping bill wise statement, export invoices, product details, HSN Code. |
| 8 | Export Clearance Details | Quantity of product exported during 1st Apr 23 to 31st Mar 24 | Shipping bill wise statement |
| FOB value of product exported during 1st Apr 23 to 31st Mar 24 | Shipping bill wise statement. Shipping bills, export invoices, Sales register | ||
| 9 | Period | Period of Export | |
| 10 (10 A to 10 D) |
Inbound Transport Costs | Total VAT , Excise duty paid on transpiration cost actually incurred in procuring inputs for manufacture of exported product | Freight invoices, transport contracts, VAT and excise duty receipts. |
| 11 (11 A to 11 D) |
Outbound Transport Costs | Total VAT, Excise duty paid on transpiration cost actually incurred for transporting exported product | Freight invoices, transport contracts, VAT and excise duty receipts. |
| 12 (12 A) |
Electricity Duty | Total Electricity duty paid for manufacture of exported product | Electricity bills |
| 13 (13 A) |
Stamp Duty | Stamp duty paid for relevant import/export documents | Legal documents, CHA bills |
| 14 (14 A, 14 B) |
Fuel Costs | Total VAT , Excise duty paid on fuel for manufacturing of exported product | Fuel purchase receipts, VAT and excise duty receipts, fuel price updates from energy information sources. |
| 15, 16 | Embedded CGST and SGST | Embedded CGST & SGST from URD dealers | Purchase invoices from unregistered dealers, GST returns, Purchase register |
| 17 | Other Taxes | Any other taxes paid | Tax payment receipts, financial records, tax paid under relevant tax regulations |
| 18 (18 A to 18F) |
Taxes on Raw Materials/ Inputs in opening stock | Incidence of Taxes/ Duties/Levies borne by the Export Product on account of prior stage cumulative taxes on raw material/inputs consumed in the manufacture of exported product | Purchase invoices, inventory records, GST, VAT and excise duty paid details |
| 19 | Any other Tax on raw material/ inputs consumed (with justification) | Non-recoverable Taxes, Customs Duty, Environmental Taxes, Local Levies | These taxes are included in the cost of raw materials and cannot be recovered through input tax credits. Customs duty on imported raw materials adds to the cost of inputs, influencing the cost structure of export products. Environmental taxes on raw materials (e.g., carbon tax) are imposed to encourage sustainable practices and reduce environmental impact. Local levies such as entry tax, toll are charged by local authorities on the movement of goods, adding to the cost of raw materials. |
| 20 (20 A to 20 C) |
Taxes/ Duties per unit of Raw Material (only for farm sector) | VAT, CGST, SGST paid (for farms products only) | VAT on fuel used in the farm sector impacts the cost of production for farm products. CGST , SGST paid on inputs such as pesticides, fertilizers, etc., used in the production of agricultural goods. |
| 21 | Kindly indicate any exemptions/ concessions w.r.t. fuel taxes/stamp duty/electricity duty/any other taxes being availed. etc. | Kindly indicate any exemptions/ concessions w.r.t. fuel taxes/stamp duty/electricity duty/any other taxes being availed. etc. | Government notifications, tax exemption certificates, fuel purchase receipts. Legal documents, state government notifications on stamp duty exemptions, tax exemption certificates. Electricity bills, state government notifications on electricity duty exemptions, tax exemption certificates. Tax payment receipts, financial records, relevant tax regulations, government notifications on tax exemptions. |
| 22 | Total Taxes/ Duties/ Levies Paid on exported product during the period 01.04.2023 to 31.03.2024 | Rs. (10 + 11 + 12 + 13*14 +15 * 16 + 17 + 18H + 19 + 20 – 21) | |
| 23 | Total accrued RoDTEP during the period 01.04.2023 to 31.03.2024 | DGFT portal, export invoices, shipping bills, RoDTEP claim records | |
| 24 | RoDTEP Rate given for the exported product | DGFT (Directorate General of Foreign Trade) notifications, Appendix 4R and 4RE of the Handbook of Procedures, DGFT portal | |
| 25 | What Percentage of FOB value accounts for taxes/ duty/ levies paid on exported product | %(22/8B) | |
| 26 | Comparison of accrued RoDTEP with total Taxes/ Duties/ Levies paid on exported product | Sum up all the taxes, duties, and levies paid on the raw materials, inputs, and the exported product itself. This is the total amount of benefit you are eligible for under the RoDTEP Scheme during the specified period. |
|
| 27 | Remarks |
Practical Tips for Filing the Return
– Keep physical or digital records substantiating the duty remission claims filed in the ARR.
– Familiarize yourself with the format provided in Appendix-4RR.
– Ensure that the ARR is submitted by March 31 of the following financial year to avoid penalties.
– Be aware of the composition fee for delayed filing and ensure timely payment if necessary.
– Be prepared for periodic assessments and potential scrutiny based on IT-assisted risk criteria.
– Calculating the exact tax element for inbound and outbound transportation can be complex. Use practical methods to estimate these costs.
– Ensure that all supporting documents are accurate and readily available for assessment.
– Be aware of potential objections from review of return and details provided scheme’s compliances.
– Given the complexity and legal implications of the RODTEP scheme, it is advisable to seek guidance and expert opinion from tax consultants. They can provide valuable insights and ensure compliance with all legal requirements.
– Tax consultants can help identify the correct codes, prepare documentation, practical solutions for calculating the tax element for inbound and outbound transportation not only ensuring compliance with the ARR filing requirements but ensuring accurate application of the RODTEP scheme.
– By leveraging the expertise of tax consultants, exporters can navigate the complexities of the RODTEP scheme and maximize their benefits while ensuring full compliance with legal requirements.
The RODTEP scheme is a vital initiative by the Indian government to support exporters by refunding various embedded taxes and duties. By following the new guidelines for filing the Annual RODTEP Return (ARR), exporters can ensure they receive the benefits they are entitled to. It’s essential to maintain accurate records, understand the filing format, and submit the ARR on time to avoid penalties. Given the complexities involved, proper working, seeking advice from tax consultants, correct filing of return can be highly beneficial. This will navigate the legal requirements and ensure that your claims are accurate and compliant.