The Ministry of Textiles has notified a new scheme to rebate all embedded state and central taxes and levies to enhance the competitiveness of apparels and made-ups exports from India. The Rebate of State and Central Taxes and Levies on Export of Garments and Made-ups (RoSCTL) scheme will see the Centre forego a tax revenue of approximately Rs 6,300 crore every year, Raghvendra Singh, secretary, Ministry of Textiles, said.
The rebate of state taxes and levies will include value added tax (VAT) on fuel used in transportation, captive power, farm sector, mandi tax, duty of electricity, stamp duty on export documents, embedded SGST paid on inputs such as pesticides, fertilisers etc. used in production of raw cotton, purchases from unregistered dealers, coal used in production of electricity and inputs for transport sector. Similarly, the rebate of central taxes and levies comprise of central excise duty on fuel used in transportation, embedded CGST paid on inputs such as pesticides, fertilisers etc. used in production of raw cotton, purchases from unregistered dealers, inputs for transport sector and embedded CGST and compensation cess on coal used in the production of electricity.
The maximum rate of rebate for apparel will now be 6.05 per cent. In the case of made-ups, this goes up to 8.2 per cent.
The decision is expected to help the textile industry that is readying to see the phase out of support schemes like merchandise export from India scheme (MEIS) that are not compatible with World Trade Organisation (WTO) stipulations. The centre had last year itself announced a rebate on all embedded state taxes and levies. The current decision extends this support by adding the central tax component also to the scheme in accordance with the recognised international economic principle of zero rating of export products. Apparels and made-ups account for about 56 per cent of India's $39.2 billion worth of textile exports.
Singh said that a similar rebate on all embedded state and central taxes and levies is being discussed for other textile segments (fibre, yarn, fabric etc) also. 'A new committee will look into this matter," he informed.
The new scheme came into effect on March 7, 2019 and will remain in force up to March 31, 2020.