Outlay for export tax remission plans unlikely to change in Budget

In the interim budget presented in February, the government earmarked ₹16,575 crore for the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for this fiscal, against ₹15,669 crore in the revised estimate for 2023-24.

Another ₹9,246 crore was earmarked for the Rebate of State and Central Taxes and Levies (RoSCTL), meant for textiles and garments exporters, compared with ₹8,205 crore in 2023-24.

Under these schemes, the government reimburses eligible exporters for various state and central taxes and levies on inputs consumed in exported products. The idea is to keep exports zero-rated, in sync with the global best practices. “Exporters have been demanding adequate allocations for RoDTEP and RoSCTL schemes. The government will review these schemes in the last week of July (after the full budget for 2024-25) and come to a decision. So, the interim budget allocations will be retained in the full budget,” one of the officials told ET on condition of anonymity.

In March, the government expanded the RoDTEP coverage to extend such benefits to companies in special economic zones and export-oriented units. This led to calls for raising the 2024-25 budgetary allocation for this scheme.

Another official, however, said the government expected the outgo under the RoSCT to drop from the 2024-25 budgetary target given the subdued growth in textiles and garment exports. So, the remaining budgetary allocation for the RoSCTL scheme may be deployed to extend the RoDTEP benefits. “So, no extra allocation may be required for RoDTEP even after its expansion,” said the official, who did not wish to be identified.

The quantum of the refunds under these tax remission schemes varies, depending on the products. For instance, under the RoDTEP scheme, eligible exporters get refunds in the range of 0.3% to 4.3% of the freight-on-board value of the exported products.

In the pre-budget meeting with finance minister Nirmala Sitharaman this week, the Federation of Indian Export Organisations rooted for adequate allocation for tax refunds, stating that making exports zero-rated “is an avowed policy of the government and this should not be limited to budget constraints”.Merchandise exports increased 5.1% year-on-year in the first two months of this fiscal to $73.12 billion.