Cabinet approves continuation of scheme for Rebate of State and Central Taxes and Levies for export of garments

New Delhi [India], February 1 : The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the continuation of the Scheme for Rebate of State and Central Taxes and Levies (RoSCTL) for the export of Apparel/Garments and made-ups up to March 31, 2026.
The continuation of the scheme for the proposed duration of two years will provide a stable policy regime, which is essential for long-term trade planning, especially in the textiles sector, where orders can be placed in advance for long-term delivery.
The continuation of RoSCTL will ensure predictability and stability in the policy regime, help remove the burden of taxes and levies and provide a level playing field on the principle that "goods are exported and not domestic taxes."
The Union Cabinet had given approval of the scheme up to March 31, 2020, and further approval was given for the continuation of RoSCTL until March 31, 2024. The present extension, up to March 31, 2026, helps enhance the export competitiveness of garments and made-up sectors. It makes apparel/garments and made-up products cost-competitive and adopts the principle of zero-rated export.
The other textile products (excluding Chapters 61, 62 and 63) not covered under RoSCTL are eligible to avail of the benefits under RoDTEP along with other products. The objective of the scheme is to compensate for state and central taxes and levies in addition to the duty drawback scheme on the export of apparel, garments and makeup by way of a rebate. It is based on an internationally acceptable principle that taxes and duties should not be exported to enable a level playing field in the international market for exports. Hence, not only indirect taxes on inputs are to be rebated or reimbursed but also other unrefunded state and central taxes and levies are to be rebated.
Rebate of State Taxes and Levies comprises VAT on fuel used in transportation, captive power, farm sector, mandi tax, duty on electricity, stamp duty on export documents, embedded SGST paid on inputs such as pesticides, fertilisers, 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. Rebate of Central Taxes and Levies comprises central excise duty on fuel used in transportation, embedded CGST paid on inputs such as pesticides, fertiliser, etc. used in the production of raw cotton, purchases from unregistered dealers, inputs for the transport sector and embedded CGST and Compensation Cess on coal used in the production of electricity.
RoSCTL has been an important policy measure and has helped in enhancing the competitiveness of Indian exports of apparel and made-ups, which are value-added and labor-intensive segments of the textile value chain. The continuation of the scheme for a further duration of two years will provide a stable policy regime, which is essential for long-term trade planning, especially in the textiles sector, where orders can be placed in advance for long-term delivery.