RoDTEP & DBK Calculation: A Comprehensive Guide for Exporters

India’s export industry plays a vital role in the country’s economy, and to support and boost this sector, the government has implemented several schemes, including the Remission of Duties and Taxes on Exported Products (RoDTEP) and Duty Drawback (DBK). Both RoDTEP and DBK aim to make Indian products more competitive in the global market by reimbursing the taxes and duties incurred during production. This blog will explore the calculation methods for RoDTEP and DBK, helping exporters maximize their benefits.

What is RoDTEP?

The Remission of Duties and Taxes on Export Products (RoDTEP) scheme was introduced by the Government of India to replace the Merchandise Exports from India Scheme (MEIS), coming into effect on January 1, 2021. This scheme aims to boost the competitiveness of Indian exporters by ensuring that they are not burdened by the embedded taxes and duties incurred in the production and transportation of export goods, which were previously unrecovered through other mechanisms.

RoDTEP reimburses a wide range of taxes and duties that were not previously refunded, allowing exporters to claim remission on:

• Central and State taxes on fuel used for the transportation of goods, ensuring lower operational costs.
• Mandi tax and other local levies, reducing the financial burden on agricultural exports.
• Electricity duties paid during the manufacturing process, helping energy-intensive sectors lower their costs.
• Taxes on inputs like fertilizers used in agriculture, promoting the export of agricultural products by offsetting input costs.

By covering these taxes, RoDTEP ensures that exporters do not bear the burden of embedded taxes, making their goods more competitive internationally.

RoDTEP Calculation Process

RoDTEP rates vary depending on the product category and are specified as a percentage of the Freight on Board (FOB) value. Here’s a step-by-step guide to calculating the RoDTEP benefit:

1. Identify the Applicable RoDTEP Rate: The government provides a schedule listing the RoDTEP rates for different products based on the HSN code. Exporters need to identify the rate applicable to their products from this schedule.

2. Determine the FOB Value: The FOB value is the price of the goods at the port of shipment, excluding any insurance and freight charges. This value is crucial for calculating the RoDTEP benefit.

3. Calculate the RoDTEP Benefit: Multiply the FOB value by the applicable RoDTEP rate to determine the rebate amount.

4. RoDTEP Calculation Formula The formula to calculate the RoDTEP benefit is:

RoDTEP Benefit = FOB Value × RoDTEP Percentage Rate

Where:

• • FOB Value is the price of the goods at the port of shipment, excluding insurance and freight.
  • RoDTEP Rate is the percentage specified for the product category.

Example Calculation: If the FOB value of your product is INR 1,00,000 and the applicable RoDTEP rate is 2%, the RoDTEP benefit would be:

RoDTEP Benefit = 1,00,000 × 2% = INR 2,000

5. Ensure Compliance: Exporters must maintain proper documentation and comply with the requirements laid out by the government to claim the RoDTEP benefit.

6. Check RoDTEP Incentive Amount Online: There is no need to perform manual calculations for checking the RoDTEP incentive. The RoDTEP incentive amount for each shipping bill can be verified on the ICEGATE portal of the Government of India. Log in to your account to access the incentive details.

What is Duty Drawback (DBK)?

The Duty Drawback Scheme (DBK) is another export incentive provided by the government, allowing exporters to claim a refund of customs duties paid on imported inputs used in the production of exported goods. The DBK scheme ensures that the exported products are not loaded with customs duties, making them competitive in the global market.

DBK Calculation Process

The DBK rates are predetermined and notified by the government for various product categories. The calculation of the DBK benefit involves the following steps:

1. Identify the DBK Rate: The DBK rate is specified by the government and is usually expressed as a percentage of the FOB value or per unit of the product.

2. Determine the FOB Value or Quantity: Depending on the nature of the product, the DBK can be calculated either on the FOB value or on the quantity exported.

3. Calculate the DBK Benefit: Multiply the FOB value or quantity by the applicable DBK rate to arrive at the refund amount.

4. Duty Drawback (DBK) Calculation Formula: Determine the Eligible Drawback Amount for Each Product Category:

DBK Amount = Export FOB Value × Drawback Rate

Where:

• • Export FOB Value is the Free on Board value of the exported goods.
  • Drawback Rate is the percentage specified in the DBK scrolls for the product category.

Example Calculation: If the FOB value of your product is INR 1,00,000 and the applicable DBK rate is 1.5%, the DBK benefit would be:

DBK Benefit = 1,00,000 × 1.5% = INR 1,500

5. Submission of Claim: Exporters need to file a drawback claim with the customs authorities, supported by proper documentation.

Key Differences Between RoDTEP and DBK

While both RoDTEP and DBK are aimed at reducing the cost burden on exporters, they differ in the following ways:

• Coverage: RoDTEP covers taxes and duties that are not refunded through any other schemes, while DBK specifically refunds the customs duties on imported inputs.
• Rates: RoDTEP rates are generally lower and vary widely across product categories, whereas DBK rates are higher, reflecting the customs duties paid.
• Claim Process: Both schemes require meticulous documentation, but the processes and authorities involved differ.

Maximizing Benefits: A Strategic Approach

Exporters can maximize their benefits by strategically using both RoDTEP and DBK schemes. Understanding the applicable rates, maintaining accurate records, and timely filing of claims are crucial for optimizing these incentives. Additionally, staying updated with any changes in rates or policies is essential to avoid missing out on potential benefits.

Automation in RoDTEP Incentive Calculation

Streamline Your RoDTEP & DBK Claims with Automation

As an exporter in India, you might be wondering how to automate the manual process of checking RoDTEP & DBK incentives. Manual calculations for RoDTEP can be prone to errors and delays, but automation can make a significant difference. Our advanced automation RoDTEP solutions – Export incentive management by Revalsys Technologies simplify and speed up the calculation and filing of RoDTEP claims, allowing exporters to focus on expanding their business.

Key Benefits of Automation

• Eliminate Human Error: Automatically calculate eligible RoDTEP benefits with precision, reducing the risk of claim rejections.
• Faster Processing: Expedite your claims by automating data collection, verification, and submission processes.
• Real-Time Compliance: Stay up-to-date with RoDTEP guidelines through automated updates and compliance checks.
• Simplified Reporting: Generate detailed reports on claims and benefits instantly, without manual intervention.
• Cost-Effective: Reduce administrative overhead by automating repetitive tasks.

Why Automation is a Game-Changer for Your Export Business

Revalsys Technologies automation solution – RoDTEP integrates seamlessly with your export management systems & third party, making the entire process of incentive calculation and claim submission faster and more efficient. Here’s how it works:

1. Data Integration

Our system automatically pulls export-related data from export incentive management portals, your existing databases, ERP systems, or spreadsheets, ensuring accurate information collection without manual input.

2. Incentive Calculation

Using built-in RoDTEP guidelines and rates, the tool calculates your eligible incentives with precision, factoring in relevant duties and taxes applicable to your exports.

3. Error Detection & Correction

The system performs real-time validation of data, identifying any discrepancies or missing information that may cause claim rejections. It automatically flags errors for correction before submission.

4. Automated Claim Filing

Once verified, the system prepares and submits your RoDTEP claims directly to the relevant authorities, eliminating the need for manual paperwork and reducing processing time.

5. Real-Time Monitoring

Track the status of your claims in real time, receive notifications on updates or required actions, and access detailed reports on your RoDTEP benefits at any time.

6. Compliance Updates

The system automatically adapts to any changes in RoDTEP guidelines, ensuring ongoing compliance without manual intervention.

Conclusion

RoDTEP and DBK are vital tools for exporters looking to enhance their competitiveness in the global market. By understanding the calculation processes and ensuring compliance, exporters can significantly reduce their cost burdens and boost their profitability. As these schemes evolve, it’s crucial to stay informed and adjust your export strategies accordingly.