JOIN ONLINE / OFFLINE CLASSES . DOWNLOAD MOBILE APP

Aatma Nirbhat Textiles

Rebate of State and Central taxes and Levies (RoSCTL) on Export of Apparel Garments and Made-ups

The Ministry of Textiles first launched a scheme by the name of Rebate of State Levies (ROSL) in 2016. In this scheme the exporters of apparel, garment and made-ups were refunded embedded taxes and levies through the budget of the Ministry of Textiles. In 2019, the Ministry of Textiles notified a new scheme by the name Rebate of State and Central Taxes and Levies (RoSCTL). Under this scheme, the exporters are issued a Duty Credit Scrip for the value of embedded taxes and levies contained in the exported product. Exporters can use this scrip to pay basic Customs duty for the import of equipment, machinery or any other input.

Just one year after launch of RoSCTL the pandemic set in and it has been felt that there is a need to provide some stable policy regime for the exporters.  In the textiles industry, buyer places long term orders and exporters have to chalk out their activities well in advance, it is important that the policy regime regarding export for these products should be stable. Keeping in view the same, the Ministry of Textiles has decided to continue the scheme of RoSCTL up to 31st March, 2024 independently as a separate scheme.

Tax Refund for Exported Products

It is a globally accepted principle that taxes and duties should not be exported, to enable a level playing field in the international market for the exporters. In addition, to import duties and GST which are generally refunded, there are various other taxes/duties that are levied by Central, State and Local Government which are not refunded to the exporters.  These taxes and levies get embedded in the price of the ultimate product being exported. Such embedded taxes and levies increase the price of Indian Apparel and Made-ups and make it difficult for them to compete in the international market.

Some of the cess, duties for which taxes and levies are not refunded and are part of embedded taxes directly and indirectly, are as follows:-

  1. Central & statetaxes, duties & cesses on fuel used for transportation of goods, generation of power and for the farm sector.
  2. Mandi Tax
  3. Duty on electricity charges at all levels of the production chain
  4. Stamp duty
  5. GST paid on input such as pesticides, fertilizers, etc.
  6. GST paid on purchases from unregistered dealers, etc.
  7. Cess on coal or any other products


Tax Refund for Exported Products

It is a globally accepted principle that taxes and duties should not be exported, to enable a level playing field in the international market for the exporters. In addition, to import duties and GST which are generally refunded, there are various other taxes/duties that are levied by Central, State and Local Government which are not refunded to the exporters.  These taxes and levies get embedded in the price of the ultimate product being exported. Such embedded taxes and levies increase the price of Indian Apparel and Made-ups and make it difficult for them to compete in the international market.

Some of the cess, duties for which taxes and levies are not refunded and are part of embedded taxes directly and indirectly, are as follows:-

  1. Central & statetaxes, duties & cesses on fuel used for transportation of goods, generation of power and for the farm sector.
  2. Mandi Tax
  3. Duty on electricity charges at all levels of the production chain
  4. Stamp duty
  5. GST paid on input such as pesticides, fertilizers, etc.
  6. GST paid on purchases from unregistered dealers, etc.
  7. Cess on coal or any other products

 

Value Added Info (Pre)

  • Textile: Any cloth made in a factory or in simple words a cloth made by hand or by machine, textile industry. 

Significance of Textile sector

  • Textile industry in India is one of the largest sources of employment generation in the county
  • This secter contributes to 7% of industrial output.
  • 2% of India's GDP and 12% of the country's export earnings.
  •  It generate  employs directly and indirectly is 11 crore people employed.
  • The largest producer of cotton, account of 25.5% of the global output.
  • The world’s second-largest producer of textiles & garments after China.
  • The second-largest producer of man-made fibres polyester and viscose.

 

Source: PBI and RamanIAS 

 

 

Keywords
Topic GS Indian Economy Paper-3: Employment, Growth & Development, Inclusive Growth