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What is RoSCTL scheme: Benefits, eligibility and how to apply

Rebate of State & Central Taxes and Levies (RoSCTL) scheme supports exporters by refunding taxes on garment and textiles exports. Learn more about its eligibility, application process, and benefits.

Indian exporters operating in global markets face stiff challenges, from navigating fluctuating costs to maintaining price competitiveness. Government-backed initiatives play a crucial role in mitigating these pressures and enabling sustained growth. The Rebate of State and Central Taxes and Levies (RoSCTL) scheme is one such strategic measure, designed to reimburse exporters for embedded taxes. By easing these financial burdens, the RoSCTL scheme helps exporters maintain their competitiveness and expand their global footprint. In this blog post, we will discuss various aspects of the RoSCTL scheme, including its benefits, eligibility, and application procedure.

What is the RoSCTL scheme ?

The Rebate of State & Central Taxes and Levies (RoSCTL) scheme is a key export incentive offered by the Ministry of Textiles, Government of India. The RoSCTL scheme provides rebate on all embedded state and central taxes on the export of garments and made-ups, to enhance the competitiveness of the textile sector in international markets. It offers transferable duty credit scrips to exporters, which can be used to pay customs duties.

Who is eligible for the RoSCTL scheme?

Here are the key eligibility criteria that businesses must meet to avail the benefits of RoSCTL scheme:

• Merchants or manufacturer-exporters who are directly exporting garments and made-up articles manufactured in India are eligible.
• Businesses listed on the DGFT’s ‘Denied Entity List’ are ineligible.
• Exporters must not have claimed benefits under the RoDTEP scheme.
• Exporters must apply for the scheme within one year of the shipping bill or the shipping will be time-barred and no benefit will be granted.
• The scheme is applicable for both cargo and courier exports.

Benefits of the RoSCTL scheme

The RoSCTL scheme offers several significant advantages for exporters. Below are some major benefits:

● Cost reduction

By reimbursing state and central taxes and levies, the scheme enables exporters to lower their expenses and price their products more competitively in global markets.

● Enhanced competitiveness

The scheme boosts exporter competitiveness by enabling lower product prices. The rebates help offset costs, allowing Indian exporters to compete with foreign manufacturers.

● Growth promotion

The financial support allows exporters to reinvest in their businesses, from expanding manufacturing to adopting new technologies or diversifying product lines.

● Flexible usage

There are several uses for duty credit scrips obtained through the RoSCTL scheme. Exporters can sell these to generate funds or use them to pay import tariffs on necessary inputs. This flexibility helps businesses manage cash flow effectively.

● Efficiency in bulk processing

The scheme facilitates bulk processing and allows for up to 50 shipping bills per application, streamlining processes and ensuring timely rebates, which improves financial stability.¹

Rebates under the RoSCTL scheme

Under the RoSCTL scheme, duty credit scrips are issued electronically as rebates. These scrips are maintained in the electronic duty credit ledger and can be used to pay customs duties. Eligible exporters receive rebates on the export of garments, apparel, and made-ups manufactured in India, at rates specified by the Ministry of Textiles, based on applicable state and central taxes and levies.²

List of central taxes (refundable)

● Central excise duty on fuel used in transportation.
● Embedded CGST paid on inputs such as pesticides, fertilizers, etc., used in production.
● Purchases from unregistered dealers and inputs for the transport sector.
● Embedded CGST.
● Compensation cess on coal used in the production of electricity.

List of state taxes (refundable)

● VAT on fuel used in transportation and captive power.
● Mandi tax.
● Duty on electricity.
● Stamp duty on export documents.
● Embedded SGST paid on inputs such as pesticides, fertilizers, etc., used in the production of raw cotton.
● Purchases from unregistered dealers.
● Coal used in the production of electricity and inputs for the transport sector.³

What are the restrictions on rebate under the RoSCTL scheme?

The following list of goods are not eligible under the RoSCTL scheme:

● Goods exported through transshipment, which are goods that have originated from another country but are transported through India.
● Goods subjected to minimum support price or export duty.
● Deemed exports under Foreign Trade Policy.
● Goods manufactured or exported from regions that are situated in Special Economic Zones or Export Processing Zones.
● Goods manufactured or supplied by units in Domestic Tariff Areas to units in Special Economic Zones.
● Goods that have been used after the manufacturing or reconditioning of used items.
● Goods for which duty credit claim has not been filed in a shipping bill or a bill of export in the customs automated system.⁴

Documents required for RoSCTL scheme

Below are some of documents exports must furnish to apply for the RoSCTL scheme:
● Importer Exporter Code (IEC)
● Copies of shipping bills
● Digital signature certificate
● DGFT registration
● Valid RCMC (Registration Cum Membership Certificate)
Additional documents based on product and business type may also be required.

How to apply for the RoSCTL scheme?

The following is an overview of the steps involved in the RoSCTL scheme application:

Step 1:

Fill out the ANF 4R form on the DGFT website.

Step 2:

Select your relevant regional authority (RA) and Port of Registration for RoSCTL scrips.

Step 3:

File separate applications for shipments from EDI and non-EDI ports. Each application can include up to 50 shipping bills.

Step 4:

RoSCTL scrips are valid for 24 months. Check your status and use scrips at EDI ports, get a Telegraphic Release Advise (TRA) for non-EDI ports.

Step 5:

Note the correct Scheme Code in your shipping bills to claim benefits from RoSCTL and other schemes (e.g., Duty Drawback, Special Advance Authorisation, EPCG).⁶

Risk factors under RoSCTL scheme

Although the RoSCTL plan has benefits for exporters, there are some inherent risks that must be adequately managed Some of these are as follows:

● Incorrect documentation

Inaccurate or incomplete documentation can lead to delays or rejection of rebate claims.

● Retaining proof of sale proceeds

Exporters must keep records of receiving payment in foreign currency to ensure eligibility for rebate.

● Electronic verification

Authorities may electronically verify applications and supporting documents. To prevent inconsistencies or delays, exporters should ensure all documentation is accurate and up-to-date.

● Repayment of excess rebate claims

If claim frequency exceeds the preferred level, exporters must repay overclaimed amounts. The DGFT may charge 15% annual interest on the repayment from the date the duty credit scrips were issued until repayment is made.

● Penalties for non-compliance

Non-compliance with RoSCTL regulations, such as failing to declare excess rebate receipts or committing fraud, can lead to penalties. This may include legal action under the Foreign Trade (Development and Regulation) Act, requiring exporters to repay the rebate plus interest.

● Responding to authorities' notices

Exporters must respond to notices from authorities within 30 days or face legal action under the Foreign Trade Act.⁷

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2. Gold Card Scheme for exporters: Objectives, eligibility and benefits

3. How to register for the Market Access Initiative (MAI) scheme?

4. What is the NIRVIK scheme for exporters?

5. All you need to know about Interest Equalisation Scheme and its benefits

6. All you need to know about the Transport and Marketing Assistance Scheme (TMA Scheme)

7. Understanding export incentives in India: What are the benefits for exporters?

8. What is Duty Entitlement Passbook (DEPB) Scheme for exporters?

9. Advance Authorisation Scheme: How does it help exporters?

10. What is Export Promotion Capital Goods Scheme (EPCG)?

11. What is Duty Drawback in export: Meaning, types and process

12. Understanding the benefits of RoDTEP scheme: A guide for Indian exporters

13. What is Authorized Economic Operator (AEO) Programme: How to register and obtain AEO certificate?

Frequently Asked Questions

When was RoSCTL scheme introduced?

The RoSCTL scheme was introduced on March 7th, 2019.

What is the difference between RoSL scheme and RoSCTL scheme?

Under RoSL scheme, there was no benefit on central tax and levies. But in the RoSCTL scheme, exporters get a rebate of both state and central tax and levies.

What is the validity of the RoSCTL scheme?

This scheme will be effective till March 31, 2026.

Is there any requirement to link an e-BRC (Electronic Bank Realization Certificate) while applying for RoSCTL?

No, there is no requirement of linking e-BRC to apply for RoSCTL.

Is there any fee for claiming the benefits under RoSCTL scheme?

There is no government fee for claiming benefits provided by RoSCTL scheme.

What is late-cut in RoSCTL scheme?

There is no provision for a late cut in the RoSCTL scheme. Exporters need to apply within one year of the shipping bill or else the shipping will be time-barred and no benefit will be granted.

What is the ANF 4R form (6)?

ANF 4R form (6) is the application form for receiving reimbursement under RoSCTL.

Published on July 11, 2022.

Sources:
1. https://www.credlix.com/blogs/what-is-rosctl-scheme-its-benefits-application-process-and-more

2. https://www.credlix.com/blogs/what-is-rosctl-scheme-its-benefits-application-process-and-more

3. https://saiassociatesmumbai.com/rosctl-scheme/

4. https://www.kireeticonsultants.com/rosctl-scheme

5. https://www.businessgo.hsbc.com/en/article/rosctl-scheme

6. https://www.businessgo.hsbc.com/en/article/rosctl-scheme

7. https://www.credlix.com/blogs/what-is-rosctl-scheme-its-benefits-application-process-and-more

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