The rebate of state and central taxes and levies (RoSCTL) scheme is a definition provided by the Ministry of Textiles to improve the international competitiveness of the textile and apparel sector in India. The scheme came into effect in March 2019 and provides exporters a rebate on all embedded taxes and levies at the state and central levels which have not been reimbursed through any of the existing mechanisms such as GST or duty drawback. The unreimbursed taxes include state VAT on fuels used for transport, mandi tax, electricity duties, and central taxes including excise duty on the fuel.
The purpose of the RoSCTL was to encourage the export of garments and made-ups while keeping the cost competitiveness of Indian textile products in the foreign markets. In comparison to the earlier schemes, RoSCTL promises rebates through Transferable Duty Credit Scrip, which exporters can use towards payment of customs duty or transfer to another importer.
RoSCTL solves the problem of residual unreimbursed taxes, thus ensuring complete tax neutrality in accordance with the principle of zero-rating exports. It supersedes the earlier Rebate of State Levies (RoSL) scheme, which also provides support to textile exporters, albeit intermittent, over the last several years. This scheme is very important as a source of employment and foreign exchange for the country.
Applicability of the ROSCTL Scheme
The Rebate of State and Central Taxes and Levies (RoSCTL) is an export incentive programme of the Government of India aimed particularly to help the garment and made-ups sectors. The main purpose of the RoSCTL scheme is to refund the embedded taxes and levies and refund those not compensated with other schemes/tax incentives that enhance the competitiveness of Indian textile exports in the international market.
1. The Objectives of the RoSCTL Scheme
The main aim of the RoSCTL scheme is to reimburse all concealed taxes and levies on exported products not covered under the Goods and Services Tax (GST) and other incentive schemes such as Duty Drawback. These taxes and levies include:
- Value Added Tax (VAT) on fuel for transport
- Electricity duties
- Mandi tax
- Stamp duty on export-related documents
- Embedded central and state taxes, like central excise on fuel and coal, etc.
2. Sectoral Applicability
The RoSCTL scheme is limited only to the following export sectors:
- Apparel (Garment) – Chapter 61 (Knitted garments) and Chapter 62 (Woven garments)
- Made-ups – Chapter 63 (Home textile products) includes bed sheets, curtains, towels, etc.
Note: The scheme will cease for other textile varieties, like exports of fabrics or yarns.
3. Mode of Benefit
As per the RoSCTL scheme, benefits are provided in the form of duty credit scrips, which are:
- Gatewayed through the Directorate General of Foreign Trade (DGFT)
- Transferable and tradable, thereby enabling exporters to sell in the open market
- Redeemable against import duty or payment of other charges related to customs.
4. Eligibility conditions for RoSCTL
- All exporters must have an Importer Exporter Code (IEC) and a Registration-Cum-Membership Certificate (RCMC).
- Goods should be exported on Free on Board (FOB) basis under this Scheme.
- Do submit the Shipping Bills under RoSCTL claim category.
- This scheme shall be available for both Advance Authorisation and shipments which are exempt from MEIS/SEIS.
5. Administration and Claim Process
- The benefit of RoSCTL is processed based on the Shipping Bill information provided by Customs to the Directorate General of Foreign Trade (DGFT).
- After associating all the electronic Bank Realisation Certificates (e-BRCs) with their bills of entry, exporters could finalise the claim process.
- Scrips are issued online through the DGFT portal and can be tracked online.
6. Policy Duration and Validity
Initially started in March 2019 until the implementation of the RoDTEP scheme, now the government has extended RoSCTL only for the apparel and made ups sector until March 31, 2026, which holds a mark for additional support in line with the serious tax burdens existing in that sector at present.
RoSCTL is crucial in relieving the tax burdens on apparel and made-up exports to make Indian exporters more competitive in international markets. The focused and sector-specific approach ensures that the most tax-heavy areas of textile industries get crucial support but are also within the confines of WTO.
Documentation And Registration Under ROSCTL Scheme
The Rebate of State and Central Taxes and Levies (RoSCTL) scheme is the largest intervention of the government, which intends to rebate all embedded taxes and levies that are not refundable through other established mechanisms like GST or Duty Drawback. The scheme is focused on the apparel and made-up sectors, aimed at improving export competitiveness of Indian textile products. To avail benefits under the RoSCTL scheme, the exporters must comply with certain recording and registration requirements, which are in the jurisdiction of the Directorate General of Foreign Trade (DGFT) and the Customs department.
1. Registration Requirements
Before claiming the benefits under the RoSCTL scheme, exporters have to meet the following registration requirements:
(i) Importer Exporter Code (IEC):
- All exporters must have a valid IEC issued by DGFT.
- The IEC serves as the main identification number for all export and import activities.
(ii) RCMC (Registration-Cum-Membership Certificate):
- Exporters must obtain an RCMC from the relevant Export Promotion Council (EPC).
- For the garments and made-ups sector, exporters usually register with the Apparel Export Promotion Council (AEPC) or any other sector-specific council of relevance.
- The RCMC is essential to confirm that the exporter is an accepted member of the export promotion body and thus eligible for government benefits.
2. Documents required for claiming RoSCTL Benefits
After registration, the exporters should ensure that the below-mentioned documents and records have been prepared in order to claim benefits under the RoSCTL scheme:
(i) Shipping Bill (SB):
- The Shipping Bill filed with Customs is a mandatory document for RoSCTL claims.
- Exporters must ensure that the Shipping Bill is filed under the appropriate category of RoSCTL claims by using the correct reward scheme code.
- The declaration for claiming RoSCTL benefits should be done at the time of export and cannot be added later.
(ii) e-BRC (Electronic Bank Realisation Certificate):
- This is issued by the bank on realising the export proceeds.
- e-BRC needs to be linked with the respective Shipping Bill for RoSCTL claim verification.
- An e-BRC is evidence that the exporter has received payment for the exported goods in a foreign currency.
(iii) Export Invoice and Packing List:
- These describe the exported goods and must correspond with what is mentioned in the Shipping Bill.
(iv) Bill of Lading / Airway Bill:
- This document is confirmation of shipment and should match with the information in the Shipping Bill.
(v) Declaration Under Rule 96(10) of CGST Rules (if applicable):
- Exporters availing certain exemptions under GST would need to submit a declaration under Rule 96(10) that they are not claiming double benefits.
3. Online Filing and Claim Procedure
The RoSCTL scheme is administered by the DGFT online portal, which facilitates the issuance of duty credit scrips. The scheme comprises the following phases:
(i) Data Transmission from Customs to DGFT:
- After issuance of Let Export Order (LEO) on processing of Shipping Bill, the data is transmitted electronically from Indian Customs Electronic Data Interchange System (ICES) to DGFT.
(ii) DGFT Portal Access:
- Exporters log in to the DGFT portal using their Importer Exporter Code (IEC) and password.
(iii) Application Submission for RoSCTL Script:
- The exporters are required to select the qualifying Shipping Bills and apply in the RoSCTL module on DGFT Portal.
- All necessary supporting documents, namely e-BRC and other declarations, are important to upload.
(iv) Duty Credit Scrips Issuance:
- Endorsed by DGFT after the verification, electronic duty credit scrips (e-scrips) are issued, with the issuance made in the customs ledger of the exporter (ICEGATE).
4. Utilisation and Transfer of RoSCTL Scrips
Scrips shall be valid after issuance:
- Exporters can use them for the discharge of Basic Customs Duty (BCD) on imports.
- These scrips may also be transferred or sold to other importers as freely tradable instruments.
- Any transfer of the scrip will require recording in the DGFT system for compliance and transparency purposes.
5. Scrip Validity
- Scrips issued under the RoSCTL scheme are valid for 24 months from their date of issue.
- After these 24 months, the scrips become invalid and cannot be redeemed.
6. Compliance and Record Maintenance
Exporters shall maintain accurate records and proper documentation for audit and verification. On the spot review and verification of claims by DGFT or Customs authorities may be undertaken to ascertain whether ineligible benefits have not been availed.
Documents and registration are indispensable to support claims under the RoSCTL scheme. Exporters must account accurately for shipping bills, timely realisation of export proceeds, and procedural requirements. Such documentation and registration will allow exporters to benefit under RoSCTL, resulting in increased cash flow and global market competitiveness. The entire process for making claims has been eased and made quicker, with transparency being a major component through the government’s use of digitalisation.
Benefits Of The ROSCTL Scheme
The RoSCTL scheme is poised to be a quite remarkable scheme that will mainly yield benefits to the exporters of apparel and made-ups from India while giving a real sharp edge to them as they compete in international markets.
- Refund against Embedded Taxes and Levies: Refund of such non-claims taxes as VAT on fuel, electricity duty, mandi tax, and central excise on fuel in production and transport.
- Cost-Effective Enhancement: The scheme will relieve exporters of the overall tax burden so that they can offer competitive prices in the world market.
- Issue of Duty Credit Scrips: Exporters will be given swap scrips that are tradable for customs duty payment or for selling in the open market.
- Enhanced Liquidity and Cash Flow: The intrinsic quality of these scrips makes them instantly available as financial salvos that will improve working capital.
- Encouragement of Higher Export Volumes: Reduction of the cost of export encourages an increase in export volumes.
- Improvement of Profits Margins: Since there is going to be a reduction in the costs of embedded taxes, profit margin becomes higher for exporters.
- Support Towards Employment Generation: It would provide growth to the labor-generating sectors, especially the textiles and apparel sectors.
- Transparent and Efficient Processing: Digital applications and claims through the DGFT portal have ensured speediness and transparency in benefits distribution.
- WTO Compliance: The scheme is compliant with international trade regulations by negating embedded taxes instead of directly subsidizing.
- Upgrade India Export Competitiveness: It adds strength to India’s position in the consumption of textiles in the global market as it makes the exports more affordable.
Conclusion
The RoSCTL scheme is a very important policy measure for the enhancement of the global competitiveness of Indian apparel and made-up exports by giving refunds for embedded non-creditable taxes and levies. This measure reduces the costs of exports and improves liquidity through tradable duty credit scrips that help the exporters get better cash flow. Transparent digitalised processes complying with WTO rules make RoSCTL a bulwark for India’s position in the global textile market. This scheme has been a stimulant for exports, employment generation, and sustainable growth of the textile sector, thus being an important pillar of India’s export incentive structure.
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