Key tax refund scheme for garment exporters extended

By: |
August 14, 2021 5:15 AM

With this, the government also junked an earlier plan to replace the RoSCTL with the Remission of Duties and Taxes on Exported Products (RoDTEP), which is expected to be operationalised soon.

A Sakthivel, chairman of the Apparel Export Promotion Council (AEPC), said the move will help the country realise the lofty merchandise export target of $400 billion for FY22. (File image)A Sakthivel, chairman of the Apparel Export Promotion Council (AEPC), said the move will help the country realise the lofty merchandise export target of $400 billion for FY22. (File image)

The government on Friday notified its decision to extend by over three years the validity of a key tax refund programme for garments and made-up exporters up to March 2024 to ease liquidity flow to the critical labour-intensive sector in the aftermath of the pandemic.

Extant refund rates under the Rebate of State and Central Taxes & Levies (RoSCTL) scheme will be retained for some more time. At present, garment exporters get scrips up to about 6% of the freight-on-board value of the products and made-up exporters are entitled to a maximum of 8.2%. The notification ends uncertainties over the continuation of tax refunds and will prop up garment exports that have lost pace of late.

A mechanism for reviewing the rates periodically will be devised by the ministries of finance and textiles, the notification said.

With this, the government also junked an earlier plan to replace the RoSCTL with the Remission of Duties and Taxes on Exported Products (RoDTEP), which is expected to be operationalised soon.

However, exporters of the textiles products that are not covered under the RoSCTL scheme will get the RoDTEP benefits, along with those of other goods. The Cabinet had approved the extension of the RoSCTL scheme on July 14.

The scrips are to reimburse the exporters for various embedded taxes and levies (not subsumed by GST) contained in the exported product to keep such exports zero-rated, in sync with global best practices. Exporters can use this scrip to pay basic customs duty for the import of equipment, machinery or any other input.

A Sakthivel, chairman of the Apparel Export Promotion Council (AEPC), said the move will help the country realise the lofty merchandise export target of $400 billion for FY22.

“The decision adds to the stability of the export policy of textiles. The scheme will promote start-ups and entrepreneurs to start exporting their products. It will rejuvenate the textiles sector and, in three years, the Indian textile value chain can attain annual exports of $100 billion,” Sakthivel said.

Having shot up sharply in April and May, primarily due to a favourable base, growth in the country’s garments exports lost pace in June. Such exports grew just 25% year-on-year, against a 48% jump in overall merchandise exports. Overall textile and garment exports had recorded a 10% contraction last fiscal, worse than a 7% drop in overall goods exports.

Do you know What is India expected to grow 10 pc during current fiscal: NCAER Director General Poonam Gupt,FinMin releases Rs 9,871 cr grant to 17 state, Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Govt receiving max FDI proposals in 3 depts from nations sharing land border with India
2Labour codes unlikely to be implemented this fiscal
3COVID-19 pandemic hit country’s economy hard: President Ram Nath Kovind