Duty Draw Back vs Remission of Duties and Taxes on Exported Products (RoDTEP)

 

Definition of Imports Under GST:

• As per IGST (Integrated Goods and Services) Act, 2017, Import is defined as bringing commodities /services from overseas into India. 
• Under GST regime, all imports are considered as inter-state supplies.
• As imports are considered at par with inter-state supplies, IGST is applicable to all imported goods and services  along with custom duties as applicable.

Duty Draw Back vs Remission of Duties and Taxes on Exported Products (RoDTEP):

• In order to have competitive trade, Exports needs to be zero-rated exports.
• To ensure competitive trade, GOI has multiple schemes
• In Pre-GST era, Duty drawback scheme was in place to ensure refund of taxation by Governments.
• Post-GST, Remission of Duties and Taxes on Exported Products (RoDTEP) is the prominent scheme.

Duty Draw Back:

• The duty drawback scheme allows exporters to get a refund when the customs duties are paid on imported items .
• These imported items are used in manufacturing of the items that are to be exported as illustrated:

Remission of Duties and Taxes on Exported Products (RoDTEP):

• In GST regime, the export industry in India remains internationally competitive prices due to the claiming of Input Tax Credit (ITC).
• But there are certain taxes which are out of GST regime e.g. Taxes on fuel used in transportation, Mandi tax, taxes on electricity, petroleum products etc 
• These taxes which are not covered under GST are not refundable under Input Tax Credit (ITC) in case of exports even in the GST regime.
• The objective of Remission of Duties and Taxes on Exported Products (RoDTEP) is to neutralise the impact of these non -GST taxes upon exported goods by providing rebates on all these non-GST taxes which are not refunded through Input Tax Credit (ITC). 
• Remission of Duties and Taxes on Exported Products (RoDTEP) ensures that Exports remain zero-rated exports by reimbursing the non-GST taxes upon submitting a proof that the items have been exported.
• All exporters of goods - merchant exporters and manufacturer exporters and SEZ  are eligible to claim the benefits of the RoDTEP scheme as long as the country of origin is India.