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What is the primary objective of the RoDTEP scheme introduced by the Government of India?
- a)To encourage imports
- b)To prevent rupee depreciation
- c)To reduce taxes on exports
- d)To promote domestic consumption
Correct answer is option 'C'. Can you explain this answer?
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What is the primary objective of the RoDTEP scheme introduced by the G...
The Government recently extended export benefits under the RoDTEP scheme for one more year.
About Remission of Duties or Taxes on Export Products (RoDTEP) scheme:
- It was introduced by the Government as a duty remission scheme on exports and is being implemented from 1st January 2021.
- It was enforced to repeal and reduce taxes for exported products, thereby encouraging the conditions of exported and increasing the amount of exports in the country.
- The scheme will be administered by the Department of Revenue, Ministry of Finance.
- Tax reimbursement under RODTEP:
- The Scheme provides a mechanism for reimbursement of taxes, duties and levies, which are currently not being refunded under any other mechanism at the central, state and local level but which are incurred by the export entities in the process of manufacture and distribution of exported products.
- This does not only include the direct cost incurred by the exporter but also the prior stage cumulative indirect taxes on goods.
- It is a WTO-compliant scheme and follows the global principle that taxes/duties should not be exported.
- RoDTEP replaced the Merchandise Export Incentive Schemes (MIES), in response to the US challenging the Indian export subsidies under the MEIS at the WTO. When the WTO dispute panel ruled against India, RoDTEP was framed to ensure that India remains WTO-compliant, while also supporting low-volume exports of commodities from India.
- Eligibility:
- It is applicable to all the sectors involved in the export of goods irrespective of their turnover, provided the country of manufacturing of the exported goods should be in India.
- Such an exporter may either be the merchant or manufacturer exporter. However, such goods should have been directly exported by such a person.
- Goods exported through e-commerce platforms are also eligible under this scheme.
- Process of Refund:
- Rebate under the scheme is provided to eligible exporters as a percentage of the freight on board (FOB) value of exports.
- Remission is issued in the form of transferrable e-scrips (type of certificates with some monetary value) maintained in an electronic credit ledger by the CBIC (Central Board of Indirect Taxes and Customs).
- e-scrips can be used for paying basic customs duty on the import of goods or may be transferred electronically to another party.
What is Freight on Board (FOB)?
- Freight on Board (FOB), also referred to as Free on Board, is an international commercial law term published by the International Chamber of Commerce (ICC).
- It indicates the point at which the costs and risks of shipped goods shift from the seller to the buyer.
- The buyer is responsible if the goods are damaged or lost while in transit.
Hence option c is the correct answer.
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What is the primary objective of the RoDTEP scheme introduced by the G...
The primary objective of the RoDTEP (Remission of Duties and Taxes on Exported Products) scheme introduced by the Government of India is to reduce taxes on exports.
Background:
- The RoDTEP scheme was announced by the Indian government in 2019 to replace the earlier Merchandise Exports from India Scheme (MEIS).
- The MEIS provided export incentives to various sectors by refunding the taxes and duties paid on inputs used in the manufacturing and export process.
- The RoDTEP scheme aims to address the World Trade Organization's (WTO) concerns regarding India's export subsidy programs, as the MEIS was inconsistent with WTO norms.
Key Objectives:
1. Tax Reduction: The primary objective of the RoDTEP scheme is to reduce the taxes and duties levied on various inputs used in the manufacturing and export process. This reduction in taxes will make Indian products more competitive in the international market.
Benefits of Tax Reduction:
- Cost Competitiveness: Lower taxes reduce the overall cost of production, making Indian products more competitive in terms of pricing.
- Export Growth: Reduced taxes on exports will encourage exporters to scale up their operations and explore new markets, leading to increased export volumes.
- Attract Foreign Investment: Lower taxes can also attract foreign investment as it provides a favorable business environment for companies looking to set up manufacturing units in India for export purposes.
- Boost to MSMEs: Micro, Small, and Medium Enterprises (MSMEs) heavily rely on exports for growth. The RoDTEP scheme will provide them with significant tax benefits, enabling them to compete globally.
Implementation:
- The RoDTEP scheme is being implemented in a phased manner, and a committee has been formed to finalize the rates and coverage of the scheme for different sectors.
- The rates under RoDTEP will be determined based on various factors such as the average input-output ratios, sector-specific indirect taxes, and embedded duties.
Conclusion:
The RoDTEP scheme introduced by the Government of India aims to reduce taxes on exports to make Indian products more competitive in the global market. This will boost export volumes, attract foreign investment, and provide significant benefits to MSMEs. The scheme is being implemented in a phased manner, and the rates and coverage will be finalized based on sector-specific factors.
Background:
- The RoDTEP scheme was announced by the Indian government in 2019 to replace the earlier Merchandise Exports from India Scheme (MEIS).
- The MEIS provided export incentives to various sectors by refunding the taxes and duties paid on inputs used in the manufacturing and export process.
- The RoDTEP scheme aims to address the World Trade Organization's (WTO) concerns regarding India's export subsidy programs, as the MEIS was inconsistent with WTO norms.
Key Objectives:
1. Tax Reduction: The primary objective of the RoDTEP scheme is to reduce the taxes and duties levied on various inputs used in the manufacturing and export process. This reduction in taxes will make Indian products more competitive in the international market.
Benefits of Tax Reduction:
- Cost Competitiveness: Lower taxes reduce the overall cost of production, making Indian products more competitive in terms of pricing.
- Export Growth: Reduced taxes on exports will encourage exporters to scale up their operations and explore new markets, leading to increased export volumes.
- Attract Foreign Investment: Lower taxes can also attract foreign investment as it provides a favorable business environment for companies looking to set up manufacturing units in India for export purposes.
- Boost to MSMEs: Micro, Small, and Medium Enterprises (MSMEs) heavily rely on exports for growth. The RoDTEP scheme will provide them with significant tax benefits, enabling them to compete globally.
Implementation:
- The RoDTEP scheme is being implemented in a phased manner, and a committee has been formed to finalize the rates and coverage of the scheme for different sectors.
- The rates under RoDTEP will be determined based on various factors such as the average input-output ratios, sector-specific indirect taxes, and embedded duties.
Conclusion:
The RoDTEP scheme introduced by the Government of India aims to reduce taxes on exports to make Indian products more competitive in the global market. This will boost export volumes, attract foreign investment, and provide significant benefits to MSMEs. The scheme is being implemented in a phased manner, and the rates and coverage will be finalized based on sector-specific factors.
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What is the primary objective of the RoDTEP scheme introduced by the Government of India?a)To encourage importsb)To prevent rupee depreciationc)To reduce taxes on exportsd)To promote domestic consumptionCorrect answer is option 'C'. Can you explain this answer?
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