The fiscal year 2019 has been really an up and down year for the export related economical growth of India. A dip of 9% in exports was also seen and recorded in the first five months of the financial year. The government of India with the help of Ministry of Finance hence announced several slews and measures that are export and tax refund centric to boost the economy through the new Remission of Duties or Taxes on Export Product (RoDTEP) scheme.
Recent updates on Tax Refund for exporters:
The finance ministry in September announced the new scheme for remission of taxes on export of products. This new tax refund scheme is going to replace the old Merchandise Exports from India Scheme (MEIS). This new scheme is introduced with the aim of benefitting all the industrial products including textiles. Slew measures in form of new scheme were also introduced for GST refund of taxes and duties on exports in India. This scheme will stimulate the growth in exports as well as the economy of the country. Revenue of Rs. 50,000 Crore is expected to be forgone under the new scheme during the Tax Refund.
Why there is a need for this overhaul in Export Tax Refund Scheme?
The new Tax Refund scheme introduced by the Finance Ministry is actually the much needed positive booster for the export organizations. It is very attractive as it will reduce the duties and neutralize the levies imposed and suffered by the export business owners. To speed up the refund of GST and availing the Input Tax Credit (ITC), a fully automated refund electronic system will be introduced too. This scheme will help the exporters facing difficulty in claiming GST Refund by easing up the process and managing any time constraint. Also, the scheme is expected to go a long way with the measures specifically improving the outflow of credit from the banks and the rate cut transmissions in interest will improvise the credit cost and its availability. The tax refund scheme is aiming to support all the export business in India either with high or with low risk to expand and grow. The scheme is also fully compliant with the World Trade Organization’s norms and rule making it more helpful and beneficial to the exporters in the short term as well as the long run.
Advantages of new Tax Refund Scheme:
The new scheme is all in positive steps and with its introduction recently it has multiple advantages for the exporters and taxpayers. The added advantages of the tax refund scheme are-
- The scope of Export Credit Insurance Scheme (ECIS) will be expanded and introduced.
- The constraints of working capital of traders will be eased.
- Higher insurance cover will ensure more security and tax refund overhaul will ease the burden and constraints related to fund of the exporters.
- Through digitalization the time for exports, clearance process and customs etc. will be reduced.
- The Input Credit Refund route will be fully made automated in the GST Refund process.
- It will monitor and also speed up the process to avail ITC refund.