The Indian Government has withdrawn Merchandise Exports from India Scheme (MEIS) retrospectively from March 7, 2019 for HSN code chapters 61, 62 and 63. Claims already paid to the exporters under MEIS will be suitably adjusted against Rebate of State and Central Taxes and Levies (RoSCTL) and recoveries will be made wherever due.
As per the recommendations of the Expenditure Finance Committee, a special one-time additional ad-hoc incentive of upto 1 percent of FoB value will be provided for exports of apparel and made-ups to offset the difference between RoSCTL and RoSL + MEIS at the rate of 4 percent, from March 7, 2019 to December 31, 2019.
The Expenditure Finance Committee has recommended that the additional incentive under the scheme would be as per claims from the exporters and the total adhoc incentive would not exceed Rs. 600 cr for the period mentioned above.
The Department of Commerce will take steps for the validation of claims by the Directorate General of Foreign Trade (DGFT) and Department of Revenue (DoR) for correct disbursal of benefits. The ad-hoc incentive would be implemented in the form of scrips for which an outlay would need to be provided by DoR.
The industry had been given ROSCTL and MEIS simultaneously as each scheme had a specific purpose – MEIS for infrastructural/logistics cost disadvantage and RoSL/ ROSCTL for embedded State and Central duties and taxes, not refunded through GST. The industry has already taken these benefits of RoSCTL and MEIS into account in costing with the buyers as also in their tax planning. Hence, withdrawal of any of these benefits will have an immense effect on the working capital of the exporters.