What is the RoSCTL Scheme, Its Benefits and Eligibility?

Realizing the role exports play in developing our economy and bringing in foreign currency, the Government of India has created many export promotion schemes. These include the EPCG (Export Promotion Capital Goods), the RoSCTL schemes, and agencies like Export Credit Guarantee Corporation (ECGC) scheme, among others.

This article will focus on the RoSCTL (Rebate of State and Central Taxes) scheme and its encouragement of exporters in the apparel and made-up textile sectors. The RoSCTL scheme was launched in March 2019 to make Indian textile products competitive globally by refunding levies and taxes not covered by GST.

What are the key features of the RoSCTL scheme?

Let’s understand the RoSCTL scheme so that you, as an exporter, can benefit from it.

Under the RoSCTL scheme, you can claim reimbursement of taxes and levies

• Get rebates on those taxes and levies levied by central and state governments and not reimbursed under other tax schemes like GST
• These could include state taxes like VAT (value-added tax) on electricity duties, fuel used for transportation, stamp duties, and mandi tax
• From the central government, it could include embedded taxes on inputs and duty on fuel
• Coverage includes apparel, made-up textiles ( like curtains, bed covers, comforters, tablecloths, etc.), and garments
• Exporters in these categories can avail of this benefit to set off costs rising due to domestic taxes
• You can get the rebate as duty credit scrips that you can use to pay duties or trade them in the market
• The RoSCTL scheme was implemented for three years but has been extended from time to time to support the textile industry to survive in the global market

How does the RoSCTL scheme help exporters?

With the competition rising in the global market, Indian garment exporters require a boost to remain competitive. Here’s how RoSCTL helps:

Reduction of costs

The cost of production can add up in the textile industry due to numerous factors like transportation, power usage, and other operational costs. The RoSCTL scheme provides relief to the exporter by reimbursing fuel charges and offering relief from the duties on electricity and other related expenses under the scheme.

Increased competitiveness

When the cost of production, distribution, and other logistics goes down, the exporter can produce goods at reduced costs and pass this benefit on to the importer without compromising quality. When the exporter offers goods at reduced prices, it makes them more competitive in the international market. In a market where many businesses compete for the same order, pricing is essential in clinching the deal.

Incentive for more exports

The RoSCTL scheme helps exporters cut costs, become competitive, and close more deals. This, in turn, helps them become more active in the export realm and incentivizes them to expand export operations.

Improved employment

When costs are lowered, export volumes increase in the garment industry, improving employment for skilled garment workers, administrative staff, transportation workers, and others with similar skills. Increased employment encourages spending, which, in turn, helps the economy flourish.

What documents are required to apply for reimbursement under the RoSCTL scheme?

Here are the documents required for applying for reimbursement under the RoSCTL scheme:

• You need the DGFT digital signature to serve as the stamp of approval from the authorized person and verify the authenticity of the application
• The shipping bill copies provide details of the past shipments, along with the destination of the shipment and information about the logistics
• Include the certificate of registration and registration details to confirm your business is eligible under the RoSCTL scheme
• You may also be asked to provide additional documents like payment slips, acknowledgments, other certificates, etc.

How do you apply for reimbursement under the RoSCTL scheme?

Here’s how you can apply for reimbursements under the scheme:

• Study and understand the details of the scheme and whether you are eligible for it
• Keep checking updates and notifications to keep abreast of the changes in the scheme
• Look at the schedules to understand the applicable rates under the Central and State taxes
• Ensure that your business is eligible for reimbursement under the scheme
• Prepare all the relevant documents like the shipping bills, registration certificate, and more
• Select the port of registration from your shipping bills to include in your application
• Submit your application within the applicable period and wait for the issuance of duty credit scrips
• Retain all the documentation submitted for three years in case of any scrutiny

There are many aspects involved in the export process—before, during, and after the consignment is sent to the buyer. The common threads throughout are financing, documentation, and inward remittance.

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