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Dated: 08.03.2025

RoDTEP Scheme- Mandatory annual filing compliance

Introduction

The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme is a vital initiative by the Government of India aimed at refunding embedded taxes and duties on exports. It ensures competitiveness for Indian exports in the global market and aligns with World Trade Organization (WTO) regulations.

In recent months, several new notifications have been issued regarding the extension, revision, and realignment of the RoDTEP scheme, impacting exporters across various industries. This blog covers all significant changes based on these official government notifications.

Key Updates on ARR:

1. Exporters claiming RoDTEP benefits exceeding INR 1 crore in a financial year must file an Annual RoDTEP Return (ARR) by March 31st of the following financial year, as mandated by DGFT’s Public Notice No. 27/2024-25.

Public Notice No. 27/2024-25 Assessment & our views:

Detailed Assessment of DGFT Public Notice No. 27/2024-25: Mandatory Annual RoDTEP Return Filing

The Directorate General of Foreign Trade (DGFT) issued Public Notice No. 27/2024-25 on October 23, 2024, introducing mandatory requirements for filing the Annual RoDTEP Return (ARR) under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme. This notice aims to enhance transparency and accuracy in the remission of duties and taxes for exporters.

1. Introduction to the Annual RoDTEP Return (ARR)

The ARR is a comprehensive annual statement that exporters must file, detailing the nature of inputs used in export production and the actual taxes and duties incurred. This initiative seeks to align with the objectives of the RoDTEP scheme by ensuring that embedded taxes and duties not refunded through other mechanisms are accurately remitted.

2. Applicability Criteria

• Threshold for Mandatory Filing: Exporters whose total RoDTEP claim exceeds ₹1 crore in a financial year across all 8-digit HS codes are required to file the ARR.
• HS Code Specific Filing: If no individual 8-digit HS code’s claim surpasses ₹50 lakh, a single ARR should be filed for the HS code with the highest accrued support. Conversely, if any 8-digit HS code’s claim exceeds ₹50 lakh, separate ARRs must be filed for each such code.

3. Filing Deadlines and Grace Period

• Standard Deadline: The ARR for a given financial year must be filed by March 31 of the subsequent financial year. For instance, the ARR for FY 2023-24 is due by March 31, 2025.
• Grace Period: A grace period extends up to June 30, allowing for late submissions with an applicable composition fee.

4. Consequences of Non-Compliance

• Denial of Benefits: Failure to file the ARR within the stipulated timeframe results in the denial of RoDTEP benefits. Specifically, the generation of RoDTEP scrolls for shipping bills will be halted after the three-month grace period ending on June 30.
• Resumption of Benefits: Upon payment of the applicable composition fee, the processing of RoDTEP scrolls will resume within 45 days. This resumption also covers shipping bills that were previously withheld due to non-compliance.

5. Composition Fees for Delayed Filing

• Up to June 30: A composition fee of ₹10,000 is applicable for ARRs filed after March 31 but on or before June 30.
• Post June 30: For filings beyond June 30, a higher composition fee of ₹20,000 is imposed.

6. Record Maintenance Requirements

Exporters are mandated to maintain physical or digital records substantiating their duty remission claims for a period of five years. These records must be presented upon request during assessments or audits to validate the accuracy of the ARR.

7. Assessment and Audit Mechanisms

• Periodic Assessments: The DGFT may conduct periodic assessments of ARR filings to ensure due diligence and compliance.
• Risk-Based Scrutiny: An IT-assisted risk-based scrutiny mechanism will identify certain ARR filings for detailed examination. If excess claims are detected, exporters are required to refund or surrender the excess amounts. Failure to regularize such discrepancies within the given timeframe will result in the denial of future benefits under the RoDTEP scheme.

8. Implementation of the Online Filing Module

To facilitate the filing process, the DGFT has introduced an online module for ARR submission accessible via the DGFT Portal under the “Regulations > RoDTEP” section. Comprehensive user guidelines and dynamically updated FAQs are available to assist exporters in navigating the filing process.

9. Implications for Exporters

The mandatory filing of the ARR underscores the DGFT’s commitment to enhancing transparency and accuracy in the RoDTEP scheme. Exporters must diligently comply with these requirements to continue availing of RoDTEP benefits and avoid potential penalties or denial of future benefits. It is imperative for exporters to familiarize themselves with the ARR filing process, maintain meticulous records, and adhere to the prescribed timelines to ensure seamless operations under the RoDTEP scheme.

In conclusion, DGFT Public Notice No. 27/2024-25 establishes a structured framework for the mandatory filing of the Annual RoDTEP Return, aiming to streamline the remission process and uphold the integrity of the RoDTEP scheme. Exporters are advised to align their compliance practices accordingly to fully benefit from the scheme and contribute to the overall efficiency of export operations.

Assessment of Key Issues and Provisions under the RoDTEP Scheme

The Remission of Duties and Taxes on Exported Products (RoDTEP) scheme is designed to refund embedded taxes and levies that were previously non-recoverable for exporters. Based on the RoDTEP User Guide, the following key provisions and issues emerge:

Key Provisions:

1. Annual RoDTEP Return (ARR) Filing Requirement:

• If the total RoDTEP claim for a given IEC exceeds ₹1 crore in a financial year, the exporter must file an Annual RoDTEP Return (ARR).
• If no 8-digit ITC-HS code surpasses ₹50 lakh in claims, an ARR is required only for the highest claim category.
• If any 8-digit ITC-HS code exceeds ₹50 lakh, separate ARRs must be filed for each such code.

2. Scope of Refundable Taxes and Levies:

• The scheme covers taxes not refunded under any other mechanism, such as GST refunds.
• Refundable elements include VAT, excise duty, electricity duty, stamp duty, and embedded CGST/SGST on purchases from unregistered dealers.

3. Documentation and Justification:

• The exporter must substantiate calculations related to embedded taxes and levies.
• In the case of approximations, justifications should be provided to ensure compliance in case of scrutiny under the Risk Management System (RMS).

4. Separate Returns for Different Categories of Exports:

• DTA exports and AA/SEZ/EoU exports require separate RoDTEP applications.
• Merchant exporters must coordinate with manufacturers to file ARR if their total claim exceeds ₹1 crore.

5. Calculation of Transport and Other Duties:

• VAT and excise duty on inbound and outbound transport costs must be reported.
• If transport invoices do not specify fuel consumption and tax breakdowns, exporters must rely on industry surveys or previously approved RoDTEP methodology.

Key Issues Faced by Exporters:

1. Annual Return Compliance Challenges:

• Managing multiple ITC-HS codes, especially if numerous categories are above ₹50 lakh.
• Collecting data and evidence for tax incidence on transportation, electricity, fuel, and embedded CGST/SGST.

2. Complexity in Tax Calculations:

• Difficulty in accurately estimating transportation costs (especially when invoices lack tax details).
• Challenges in determining VAT, excise duty, and fuel-related levies for inbound and outbound logistics.

3. Scrutiny Risks and Justification Requirements:

• Approximate calculations need to be well-documented and justified to pass scrutiny by authorities.
• High-value exporters face increased scrutiny under the Risk Management System (RMS).

4. Data Gathering from Multiple Sources:

• Exporters need to consolidate data from transporters, suppliers, and energy providers.
• Merchant exporters face additional difficulties in obtaining tax details from manufacturers.

Solutions for Exporters to Overcome Annual Filing Challenges

1. Automation and ERP Integration:

• Implement Enterprise Resource Planning (ERP) systems to automate data collection for tax calculations and ITC-HS-wise claims.
• Use customized RoDTEP compliance software to simplify return preparation.

2. Preemptive Record-Keeping & Justification:

• Maintain detailed records of embedded taxes (e.g., VAT on fuel, excise duty on transport).
• Keep survey-based transportation cost approximations ready for verification.

3. Dedicated Compliance Team or Consultant:

• Appoint a RoDTEP compliance team or hire a professional consultant to handle tax assessments and return filing.
• Regularly update tax incidence data to avoid last-minute errors.

4. Advanced Estimation Methods for Transport Costs:

• If transport invoices do not specify fuel tax details, exporters should: Conduct a sample survey with transporters to derive standard tax estimates.
• Use historical data to establish benchmarks for transportation levies.

5. Streamlining Data Collection for Merchant Exporters:

• Develop formal agreements with manufacturers to ensure timely access to tax-related documentation.
• Implement cloud-based shared data platforms for smooth coordination.

6. Regular Internal Audits:

• Conduct quarterly reviews of RoDTEP claims to ensure compliance before annual return deadlines.
• Validate tax calculations against past RoDTEP claim approvals.

7. Proactive Risk Management for Scrutiny Cases:

• Prepare detailed tax impact assessments well in advance.
• Maintain backup documentation for justifications in case of audits.

Conclusion

The RoDTEP scheme provides significant benefits but requires exporters to maintain precise records and adhere to strict compliance norms. By implementing automation, record-keeping best practices, and structured tax estimation models, exporters can efficiently overcome ARR filing challenges while minimizing scrutiny risks.

In case you face any issues related to Indirect Tax-Customs, GST, Foreign Trade Policy (FTP), Arbitration matters and Central Licensing and related advisory matters in India then please feel free to get in touch with SJ EXIM Services.

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Source: DGFT, Ministry of Commerce, Govt. of India

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1. The views expressed are based on the interpretation of the relevant information/documents, applicable law, and government policy and there is no assurance that a court or tribunal or regulatory body or other governmental authority may not interpret it differently.

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