Indian textile exporters frequently face rising costs, tight margins, and intense global competition. One major hurdle till a few years before was the burden of embedded taxes on inputs, which weren’t refunded through any schemes. The RoSCTL Scheme (Rebate of State and Central Taxes and Levies) is a government initiative launched on 7 March 2019 to support Indian textile exporters.
This scheme focuses on refunding taxes, such as VAT, Central Excise on fuel, and electricity duties, that accumulate during manufacturing. It applies specifically to garments, apparel, and made-up industries. In 2023, textile exports of India touched around 34 billion dollars, with the sector engaging more than 45 million individuals.
For high-volume industries, the RoSCTL scheme acts as a valuable support system, offering refunds that improve margins and keep businesses running efficiently. This directly boosts working capital, giving you more room to compete internationally without taking a hit on costs.
In this article, you will find a detailed explanation of the RoSCTL scheme. This information will help you make the most of this tax rebate and support your growth plans.
What Are the Basics of the RoSCTL Scheme?
The RoSCTL scheme (Rebate of State and Central Taxes and Levies) was started to support exporters with a fresh method of duty reimbursement. It replaced the earlier RoSL programme, which was used to credit the rebate amount directly into exporters’ bank accounts. Instead, it offers duty credit scrips that exporters can transfer or sell. These are issued based on the Free on Board export value.
Launched by the Ministry of Textiles in March 2019, the RoSCTL scheme came along with a notified rate list and official updates from the Central Board of Indirect Taxes and Customs (CBIC). The new format aimed to bring more flexibility to exporters and allowed them to make use of the benefits based on their own business needs.
The decision to roll out RoSCTL came amid rising objections from other countries about India’s earlier export incentives. Countries like the United States argued that schemes such as MEIS and others did not follow the rules of global trade bodies. These objections also extended to export-related setups like SEZs, EOUs, and DFIA programmes.
RoSCTL came into focus as a longer-term support tool for Indian exporters. It helped keep the advantages intact while staying more aligned with global trade rules.
Who Is Eligible to Apply Under the RoSCTL Scheme?
Here’s a guide on who qualifies for the RoSCTL scheme and what conditions must be met to claim the refund.
- Exporter Types
Only merchants or manufacturer-exporters who send garments and made-up textile articles directly from India can apply. The products must be those included under HSN Chapters 61, 62 (apparel and garments), and 63 (made-up textile articles). Other export sectors do not qualify for RoSCTL and may need to explore different schemes.
- Valid Registration
Having a current Import Export Code is compulsory for export activities. This identifies businesses involved in international trade and is required for all claims.
- Export Documentation
Businesses must submit the correct shipping bills with the RoSCTL declaration at the time of export. Claims should be filed electronically via the ICEGATE portal. Additionally, exporters need to register their electronic scrips on the DGFT’s platform to receive the refund.
- Restrictions
Exporters listed on the DGFT’s ‘Denied Entity List’ are not allowed to use this scheme. Also, those who have claimed benefits under RoDTEP or other export incentive schemes for the same shipments are excluded. Applications must be submitted within one year of the shipping date; late claims will be rejected.
- Modes of Export
RoSCTL applies to exports sent through cargo or courier across all transport modes, making it flexible for exporters.
What Are the Key Advantages of Enrolling in RoSCTL?
Below are some of the benefits that you can gain by registering for the RoSCTL scheme.
- Lower Operational Costs
One major relief is reducing day-to-day export costs. Exporters of garments and made-ups get rebates on state and central taxes, which lowers the overall expenses. This allows you to keep product prices competitive in the global market. The reduced cost pressure also improves cash flow and helps sustain better margins over time.
- Price Edge
With price being a deciding factor in international sales, even a small margin can make a significant difference. The scheme supports offering better deals without hurting profits, helping you win repeat orders and explore new markets confidently.
- No Late Penalties
Unlike other schemes that carry fees for delays, RoSCTL offers more flexibility. You won’t face fines for late submissions, which makes it easier to handle unexpected changes in demand or delays in logistics. This penalty-free setup helps you focus on results instead of stressing over deadlines.
- Financial Support for Expansion
The financial rebates under RoSCTL serve as an added push for your business to expand. You can use these savings to improve your supply chain, try out new product lines, or reach untapped regions. It also supports investments in better tools and upgrades, making you more ready to meet global standards.
- Easy Application Process
Exporters just need to submit the ANF 4R form online with basic company details. The digital filing method saves time and effort, making the scheme accessible to exporters of different sizes and levels of activity.
- Equal Benefits Across Locations
RoSCTL is not restricted based on where you are located. Whether you work from an EDI or a non-EDI port, you can claim the same incentives. This helps regional exporters get support too, contributing to balanced growth across various parts of the country.
How Rebates are Calculated Under RoSCTL?
The rebate amount depends on the taxes and levies paid during production. Both central and state-level indirect taxes are taken into account while fixing the rebate rate.
- Central Taxes
Rebates cover the embedded central excise duty on fuel used for transport. Other eligible taxes include CGST paid on inputs such as fertilisers and pesticides used in production and electricity charges. CGST on purchases from unregistered dealers and compensation cess on coal used for power are also considered.
- State Taxes
The scheme refunds VAT on power. Other refundable charges include mandi tax, duty on electricity, and stamp duty on export papers. SGST on inputs for cotton production and charges related to unregistered local purchases also qualify. Taxes on coal used in electricity and transport inputs are part of the rebate.
You will get duty credit scrips as rebates. These are issued electronically and recorded in the duty credit ledger. They are not given as direct refunds but can be used to pay customs duties on future imports. You don’t need to submit tax invoices for every input, but you must meet compliance rules.
What Limitations Exist in RoSCTL Rebate Provisions?
The RoSCTL scheme offers exporters many advantages, but it also comes with some limits and conditions. Being aware of these restrictions helps you avoid mistakes and manage risks better.
- Goods Not Eligible
Certain products do not qualify for RoSCTL.
- Goods that pass through India but come from other countries (transshipment) are excluded.
- Items applicable to export duty or minimum support price cannot claim rebates.
- Deemed exports under the Foreign Trade Policy are also not eligible.
- Goods made or exported from Special Economic Zones (SEZ) or Export Processing Zones (EPZ).
- Products supplied by units in Domestic Tariff Areas (DTA) to SEZ units are also outside the scope.
- Used goods or reconditioned items.
- Financial Liabilities
If an exporter claims more rebate than allowed, they must return the excess amount. The Directorate General of Foreign Trade (DGFT) can charge interest at 15% per year on overpaid sums, calculated from the time the duty credit was issued until repayment.
Failure to follow RoSCTL rules, such as hiding extra rebate amounts or committing fraud, can lead to penalties, including legal steps under the Foreign Trade (Development and Regulation) Act.
- Compliance and Communication
Responding promptly to official notices is essential. You have thirty days to reply to any queries from the authorities. Ignoring these deadlines can trigger legal actions and affect future rebate claims. Keeping communication clear and timely helps you stay in good standing and avoid fines or other troubles.
What Documents Are Required to Apply for the RoSCTL Scheme?
Before applying, you must collect specific documents. Each one serves a purpose in verifying your business identity, export activities, and scheme eligibility.
- Importer Exporter Code (IEC): Your IEC acts as your business’s passport in foreign trade. It’s mandatory for any application under this scheme to help verify your export identity.
- Shipping Bill Copies: These documents include details like the port of shipment, product type, and destination, which are key proof of your exports.
- Digital Signature Certificate: This acts as your stamp of confirmation, ensuring the data submitted is valid.
- DGFT Registration: Without this, your RoSCTL application can’t move forward, as it links your export records with the government’s digital system.
- RCMC (Registration Cum Membership Certificate): This certificate shows your active membership with an export promotion council. It’s needed to confirm your business’s active involvement in export activities.
- Other Documents (if any): Depending on your product or business type, you might need extra papers such as compliance certificates or product-specific licenses.
How Can Exporters Apply Step by Step for RoSCTL Benefits?
Following these steps will help you claim benefits properly and comply with the RoSCTL rules.
- Review Official Notifications
Keep track of the updates released by the Ministry. These include revised schedules and rates for various product categories. You must always refer to the latest circulars while preparing the claims.
- Check Applicable Rates
Identify the exact rate applicable to your goods. These rates reflect the State and Central taxes that are reimbursable under the scheme.
- Confirm Eligibility
Check that your products fall within the scope of items listed in the schedules. Any mismatch may lead to application rejection, so verify this before filing.
- Gather Documents
Collect all necessary papers such as your shipping bills and a valid Registration Cum Member Certificate (RCMC). These documents support your application and prove your exports.
- File the Application
File your RoSCTL application within a year of when your shipping bill is transferred from ICEGATE to the DGFT. Missing this deadline can lead to rejection.
- Choose Port of Registration
If you export from multiple EDI ports, include all of them in one application. Then, pick one port to act as your registration point for processing.
- Submit The Form
Fill in all details correctly and apply through the DGFT portal. Incomplete applications can cause unnecessary trouble.
Once your application is approved, duty credit scrips will be issued based on the prescribed rates for your exported products. Keep your shipping bills and related documents for at least three years after the scrips are issued. These may be needed for verification by authorities.
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Conclusion
The RoSCTL scheme supports exporters, particularly in the textile sector, by helping them manage added costs through duty credit scrips. It allows your business to improve its operations without dealing with penalties and gives it more flexibility in using the advantages. Since RoSCTL aligns with global trade rules, you can feel more confident about using it. The simple application process and equal access across regions make it a useful scheme.
