SEIS is one of the Exports from India Scheme launched by DGFT in Chapter 3 of Free Trade Policy 2015-20. This scheme aims to incentivize service exporters of India with the objective to encourage and maximize export of notified Services from India (The list of notified services is given at last of this article).
Rewards under the scheme:
The rewards under the scheme are not given in the form of money but in the form of Duty Credit Scrips. Duty Credit Scrip is a scrip issued by the DGFT and can be used to pay various duties/taxes to the Central Govt. Split certificates of such Duty Credit Scrip may also be issued, at the time of application and are freely transferable.
(a) Service Providers of notified services, located in India, shall be rewarded under SEIS. Only Services rendered in two modes, i.e., Cross Border Trade (Supply of a ‘service’ from India to any other country) and Consumption abroad (Supply of a ‘service’ from India to service consumer(s)of any other country in India) shall be eligible.
(b) Such service provider should have minimum net free foreign exchange earnings of US$15,000 in year of rendering service to be eligible for Duty Credit Scrip.
(c) For Individual Service Providers and sole proprietorship, such minimum net free foreign exchange earnings criteria would be US$10,000 in year of rendering service.
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.
(d) 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.
(e) 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.
Ineligible categories under SEIS
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.
Service Providers of eligible services shall be entitled to Duty Credit Scrip at notified rates on net foreign exchange earned. These rates vary from 5% to 7% on notified services.
Procedure to apply
(a) An application for grant of duty credit scrip for eligible services rendered shall be filed online for a financial year on annual basis in ANF 3B using digital signature.
(b) The last date for filing application shall be 12 months from the end of relevant financial year of claim period.
(c) Applicant shall have option to choose Jurisdictional Registering Authority on the basis of Corporate Office/ Registered Office/ Head Office / Branch Office address endorsed on IEC for submitting application/applications under SEIS.
(d) This option needs to be exercised at the beginning of financial year.
(e) Once an option is exercised, no change would be allowed for claims relating to that year. To illustrate, if an exporter has chosen RA Chennai for claiming rewards for exports made in 2017-18, then all claims for exports made in 2017-18, irrespective of the date of application shall be made to RA Chennai only.
(f) RA shall process the application received online after due scrutiny.
Port of Registration
(a) The applicant can choose any port as port of registration and mention it in the application at the appropriate column. RA will issue the scrip with such port of registration. Such Duty credit scrip needs to be registered at the port of registration of duty credit.
(b) Once registered at EDI port, scrip can be automatically be used at any Electronic Data Interchange (EDI) port for import and at any manual port under Telegraphic Release Advise (TRA) procedure.
(c) In case port of registration is a manual port, TRA shall be required for imports at any other port.
Remittances through Credit Card and other instruments
Free Foreign Exchange earned through international credit cards and other instruments, as permitted by RBI shall also be taken into account for computation of value of exports.
Risk Management System:
(a) A Risk Management System shall be in operation whereby every month Computer system in DGFT Headquarters will select 10% of applications for each RA where scrips have already been issued. RA in turn may call for original documents in all such selected cases for further examination in detail. In case any discrepancy and/ or over claim is found on such examination, the applicant shall be under obligation to rectify such discrepancy and/or refund over claim in cash with interest. The original holder of scrip, however, may refund such over claim by surrendering the same scrip whether partially utilized or fully unutilized, without interest.
(b) Regional Authority may ask for original proof of landing certificate (wherever required under the policy), annexures attached to ANFs or any other document, which has been uploaded digitally or any other export related documents related to the application such as Export Invoices at any time within 3 years from the date of issue of scrip.
(c) Failure to submit such documents in original would make applicant liable to refund the reward granted along with interest from the date of issuance of scrip. It would be the responsibility of applicant to maintain such documents, certificate etc. for a period of at least three years from the date of issuance of scrips or the completion of scrutiny under Risk Management System initiated by the RA whichever is later.
Validity period and Revalidation
(a) Duty Credit Scrip issued under SEIS 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.
(b) Revalidation of Duty Credit Scrip shall not be permitted unless validity has expired while in custody of Customs Authority / RA / Government Authority.
List of Services and Rates of reward under SEIS:
A. Professional Services -Rate of Reward 7%
B. Research and development services -Rate of Reward 7%
C. Rental/Leasing services without operators – Rate of Reward 7%
D. Audiovisual services – Rate of Reward 7%
E. Construction and Related Engineering Services – 7% Rate of Reward
F. Educational Services – 7% Rate of Reward
G. Environmental Services – 7% Rate of Reward
H. Health and Social Services – 5% Rate of Reward
I. Tourism and Travel Services – 5% or 7% Rate of Reward
J. Recreational, Cultural and Sporting Services – 7% Rate of Reward
K. Transport & Auxiliary Services – 7% Rate of Reward
L. Other Business Services – 5% Rate of Reward
(The author of this article is a Practicing Company Secretary and can be reached at [email protected])
Disclaimer: The contents of this article are solely for informational purpose. It does not constitute professional advice or a formal recommendation. No part of this article should be distributed or copied without express written permission of the author.