Service Export from India scheme
The Government has introduced the Service Exports from India Scheme (SEIS) w.e.f. 01.04.2015 under the Foreign Trade Policy (FTP), 2015-20 replacing the earlier scheme ‘Served from India Scheme’ under the FTP, 2009-15. Under SEIS, the service providers of notified services are incentivized in the form of Duty Credit Scrips at the rate of 5% or 7% on their net foreign exchange earnings. These SEIS scrips are transferrable and can also be used for payment of a number of Central duties/taxes including the basic customs duty.
Service Providers of eligible services shall be entitled to Duty Credit Scrip at notified rates (as given in Appendix 3D) on net foreign exchange earned.
Duty Credit Scrips issued on or after 01.01.2016 under chapter-3 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. (Public Notice No. 33/2015-2020 dated 23.10.2017)
Duty Credit Scrips shall be granted as rewards under MEIS and SEIS. The Duty Credit Scrips and goods imported / domestically procured against them shall be freely transferable. The Duty Credit Scrips can be used for:
I. Payment of Basic Customs Duty and Additional Customs Duty specified under sections 3 (1), 3 (3) and 3 (5) of the Customs Tariff Act, 1975 for import of inputs or goods, including capital goods, as per DoR Notification, except items listed in Appendix 3A.
II. Payment of Central excise duties on domestic procurement of inputs or goods.
III. Duty Credit Scrip can be utilized / debited for payment of Custom Duties in case of EO defaults for Authorisations issued under Chapters 4 and 5 of Foreign Trade Policy. Such utilization /usage shall be in respect of those goods which are permitted to be imported under the respective reward schemes. However, penalty / interest shall be required to be paid in cash.
IV. Duty credit scrips can also be used for payment of composition fee under FTP, for payment of application fee under FTP, if any and for payment of value shortfall in EO under Para 4.49 of HBP 2015-20.
(Note:-Earlier, Duty Credit Scrips could be used for payment of all Customs duties. Now, it is specified that such scrips can be used for payment of Basic Customs Duty and Additional Customs Duty specified under sections 3 (1), 3 (3) and 3 (5) of the Customs Tariff Act. Thus, Duty Credit Scrips cannot be used for payment of Integrated tax (IGST) and GST Compensation Cess (if applicable) on import of goods)
1) Service Providers of notified services, located in India, shall be rewarded under SEIS. Only Services rendered in the manner as per Para 9.51(i) and Para 9.51(ii) of FTP policy shall be eligible. The notified services and rates of rewards are listed in Appendix 3D.
2) Such service provider should have minimum net free foreign exchange earnings of US$15,000 in preceding financial year to be eligible for Duty Credit Scrip. For Individual Service Providers and sole proprietorship, such minimum net free foreign exchange earnings criteria would be US$10,000 in preceding financial year.
3) 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. The list of such services is indicated in Appendix 3E.
4) Net Foreign exchange earnings for the scheme are defined as under:
Net Foreign Exchange = Gross Earnings of Foreign Exchange (-) Total expenses / payment / remittances of Foreign Exchange by the IEC holder, relating to service sector in the Financial year.
(Note:-Gross earnings of foreign exchange shall be exclusive of all taxes and duties paid on such exports from India)
5) 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 taken into account for service sector only.
6) In order to claim reward under the scheme, Service provider shall have to have an active IEC at the time of rendering such services for which rewards are claimed.
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 such as equity or debt participation, donations, receipts of repayment of loans etc. and any other inflow of foreign exchange, unrelated to rendering of service, would be ineligible.
1) Supply of a ‘service’ from India to any other country; (Mode1- Cross border trade).
2) Supply of a ‘service’ from India to service consumer(s) of any other country in India; (Mode 2-Consumption abroad).
3) Supply of a ‘service’ from India through commercial presence in any other country. (Mode 3 – Commercial Presence).
4) Supply of a ‘service’ from India through the presence of natural persons in any other country (Mode 4- Presence of natural persons.)
(Note:-Mode 1 & 2 are the only eligible service rendering manner to claim duty credit scrips under SEIS)
1) Export proceeds shall be realized in freely convertible currency except otherwise specified.
2) However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely convertible Vostro account of a non resident bank situated in any country other than a member country of Asian Clearing Union (ACU) or Nepal or Bhutan. Additionally, rupee payment through Vostro account must be against payment in free foreign currency by buyer in his non- resident bank account.
1) An application for grant of duty credit scrip for eligible services rendered shall be filed online for a financial year on annual basis in FORM ANF 3B using digital signatur.
2) RA shall process the electronically acknowledged files and scrip shall be issued after due scrutiny of electronic documents. After scrutiny, if the officer has reasonable suspicion of wrong classification/ mis-declaration in any application, in such cases officer may, after approval of his senior officer/ Head of the Office, seek physical documents for scrutiny. On receipt of such documents, the officer must decide the claim within 7 working days. In cases, where the claim is rejected, a speaking order shall be issued.
3) The documents which are not required to be submitted in original, shall be retained by the applicant for a period of 3 years from the date of issuance of scrip or as prescribed under FTP para 3.19 (b).
4) Licensing Authority may call such documents in original at any time within 3 years. In case the applicant fails to submit the original documents on demand by Licensing Authority the applicant shall be liable to refund the rewards granted along with interest at the rate prescribed under Section 28 AA of Customs Act 1962, from the date of issuance of scrip.