By God’s Grace, with blessings of all my Gurus, family members, present and former employers penned article on SEIS rewards for service exporters,. Service Exports from India Scheme (henceforth referred as ‘SEIS’) has been introduced by the Government of India w.e.f. 01.04.2015 under the Foreign Trade Policy 2015-20(henceforth referred as ‘FTP’) replacing the erstwhile ‘Served From India Scheme (SFIS)’ under the FTP 2009-15. Under SEIS rewards are given to the service exporters in the form of duty credit scrips used for making payment of duties.
The benefit under the SEIS is admissible on Mode 1 and Mode 2 services. Major services covered would include Legal, Accounting, Architectural, Engineering, Educational, Hospital services, Hotels and restaurants and other business services.
The major benefits of the SEIS were obtaining of rewards i.e. scrips would be granted as rewards under FTP for utilisation against the payment of duties, except penalty/interest shall be required to be paid in cash, instances of SEIS benefits were given below –
(a) Scrip can be utilized/debited for payment of Custom Duties in case of Export Obligation (EO) defaults for Authorisations issued under Chapters 4 and 5 (i.e.Duty exemption Schemes and EPCG Scheme) of FTP. Such utilization/usage shall be in respect of those goods which are permitted to be imported under the respective reward schemes.
(b) Duty Credit Scrips and goods imported/procured against these scrips shall be freely transferable.
(c) Scrips can also be used for payment of composition fee, application fee under FTP, if any and for payment of value shortfall in EO.
(d) However, GST Compensation Cess, IGST, CGST and SGST as applicable should be paid and could avail the eligible input tax credit as applicable under GST provisions, in terms of Trade Notice No.11/2018 Dated-30.06.2017.
(e) Once scrip has been issued, request for splits could be permitted with same port of registration as appearing on the original Scrip. The above procedure shall be applicable only in respect of EDI enabled ports in terms of Para 3.09 of HBP.
According to the Chapter 3 of FTP, Service Exports from India Scheme (SEIS), is an incentive scheme for eligible service exports provided by the person. Under this scheme service providers of the notified services are incentivized in the form of Duty Credit Scrips (hereinafter referred as ‘scrips’) at the rates specified in Appendix-3D of Hand Book of Procedures(hereinafter referred as ‘HBP’) on their net foreign exchange earnings.
The scrips issued under the SEIS could be used for payment of Basic Customs Duty and fee for import of inputs or goods, except items listed in Appendix 3A of HBP i.e. except items not allowed for import under Export from India Schemes.
Therefore, for reward under the SEIS there should be the service provider and should provide the eligible services. These have been expressed as under –
1. As per Para 9.51 of FTP, Service Provider means a person providing:
(i) Supply of a ‘service’ from India to any other country; (Mode1- Cross border trade);
(ii) Supply of a ‘service’ from India to service consumer(s) of any other country; (Mode 2- Consumption abroad);
(iii) Supply of a ‘service’ from India through commercial presence in any other country. (Mode 3 – Commercial Presence);
(iv) Supply of a ‘service’ from India through the presence of natural persons in any other country (Mode 4- Presence of natural persons).
2. The list of eligible services have been specified in the Appendix-3D of HBP. They would be summarised as under:
a. Business Services
b. Communication Services
c. Construction and Related Engineering Services
d. Educational Services
e. Environmental Services
f. Health-Related and Social Services
g. Tourism and Travel-Related Services
h. Recreational, Cultural and Sporting Services (other than audio visual services)
i. Transport Services
The objective of the SEIS scheme, according to Chapter 3.07 of the FTP, is as under –
Service providers located in India are rewarded under this scheme for rendering the notified services for such period on satisfying the eligibility. Service providers should satisfy the following for obtaining the scrips under the SEIS:
i. Service provider shall have an active Importer and Exporter Code (IEC).
ii. Should have the valid Registration cum Membership Certificate (RCMC) issued by the competent board or authority.
iii. Payment in Indian Rupees for service charges earned on specified services shall be treated as receipt in deemed foreign exchange as per guidelines of Reserve Bank of India as specified in Appendix-3E of HBP.
iv. Service provider should have minimum net free foreign exchange earnings of US$15000 in the preceding financial year.
v. For sole proprietorship and individual service providers should have minimum net free foreign exchange earnings of US$10000 in the preceding financial year.
vi. Net Foreign exchange earnings for the SEIS scheme are defined as under:
Net Foreign Exchange = Gross Earnings of Foreign Exchange (minus) Total expenses/payment/remittances of Foreign Exchange by the IEC holder, relating to service sector in the Financial year.
vii. If the IEC holder is a manufacturer of goods as well as service provider, then the foreign exchange earnings and Total expenses / payment / remittances shall be considered for service sector only.
viii. Other conditions as specified by the Government under special provisions from time to time.
Service providers not satisfying the above eligibility could be ineligible for obtaining the scrips under the SEIS in terms of Chapter 3.09 of FTP. However, following were few instances of the ineligible categories:
i. Foreign exchange remittances other than those earned for rendering of notified services would not be counted for entitlement. Thus, other sources of foreign exchange earnings would be
a. equity or debt participation,
c. any other inflow of foreign exchange, unrelated to rendering of service, receipts of repayment of loans etc. would be ineligible.
ii. Export turnover relating to services of units operating under EOU / EHTP / STPI / BTP Schemes or supplies of services made to such units
iii. Special Provisions: Government reserves the right in public interest, to impose restriction /change the rate/ceiling on Duty Credit Scrip under this policy, etc.
According to Para 3.04, an application for grant of scrip under the SEIS for eligible services rendered shall be filed in the respective Aayat Niryaat Form(ANF) by opting respective Jurisdiction of Regional Authority(RA). Procedure for obtaining SEIS – duty credit scrips as under –
I. An applicant should choose any port as port of registration and mention it in the application at the appropriate column.
II. Duly signed Certification would be required from Cost Accountant/Chartered Accountant/Company Secretary in ANF-3C and ANF-3D.
III. Opting the Jurisdictional Regional Authority(RA) based on Corporate Office/ Registered Office/Head Office/ Branch Office address endorsed on the IEC. Once an option is exercised, no change would be allowed for claims relating to that year.
IV. An application should be filed online for a financial year on annual basis in form ANF-3B by using DGFT digital signature. However, after online filing, it would be recommended to submit the said application along with the supporting duly signed documents to the RA, as few RA’s were issuing deficiency letter seeking self-certified copies
V. Jurisdictional Regional Authority (RA) shall process the application received online after due scrutiny and may issue the Duty Credit Scrips at the specified rate on their net foreign exchange earnings.
VI. Issuing hard copy of physical duty credits scrips had been discontinued w.e.f. 10.04.2019 and made it online for easy of doing business as per Trade Notice No.03/2015-2020 dated 03.04.2019.
Every month on random basis computer system, in DGFT Headquarters, will select 10% of cases for Risk Management System/Mechanism for each RA where scrips have already been issued. In this process, for examination in detail, RA might call for original documents such as –
i. Annexures attached to ANFs
ii. Original proof of landing certificate
iii. In case any discrepancy and/or over claim
iv. The applicant shall rectify such discrepancy and/or refund over claim in cash or surrendering the original scrip with interest at the rate prescribed under section 28AA of the Customs Act 1962, from the date of issue of scrip in the relevant Head of Account of Customs within one month.
v. Any other document uploaded digitally at any time within three years from the date of issue of scrip.
Due Dates under FTP
Last date for filing:
As per Para 3.15(b) of the HBP last date of filing of application, for obtaining Duty Credit Scrips under SEIS, shall be 12 months from the end of relevant financial year of claim period.
Filing After Last Date:
For belated filing of an application i.e. filing of SEIS application complete in all respects after expiry of the last date, then the late cut would be applicable.
According to the Para 9.02 of the HBP wherever any application for any fiscal/financial benefits under FTP is received after expiry of last date, then application may be considered after imposing a late cut in the following manner:
|S.No.||Particulars||Late Cut Rate|
|I||Application received after the expiry of last date but within six months from the last date||2%|
|II||Application received after six months from the prescribed date of submission but not later than one year from the prescribed date||5%|
|III||Application received after 12 months from the prescribed date of submission but not later than 2 years from the prescribed date||10%|
Validity/Preserving of Records
Validity Period of Scrips
Duty Credit Scrip shall be valid for a period of 24 months from the date of issue and must be valid on the date on which actual debit of duty is made as prescribed under Para 3.13 of HBP
Revalidation of Scrips
Revalidation of Duty Credit Scrip shall not be permitted unless validity has expired while in custody of Customs Authority/Regional Authority in terms of Paragraph 2.20(c) of Hand Book of Procedures(HBP).
Preserve of the Scrips, Documents and Records
The applicant should maintain the records, documents, certificate etc. for a period of at least three years from the date of issuance of scrips.
“In a conflict between the heart and the brain, follow your heart.”
Source: FTP/ DGFT Site/HBP
Disclaimer: The above are personal views, shared purely for information purpose only and not responsible for any kind of losses/damages. Please go through the provisions of FTP and take professional advise before taking any decision.
Earlier post of the author-Maintenance of Records Under Service tax