The present article will help you to understand the meaning of Services Export from India scheme (SEIS) in detailed manner, objectives, benefits, eligibility criteria, procedure and all other information required to avail the benefit of this SEIS scheme.
As we are aware of the fact that the promotion of exports of a country is always been the most critical and vital course of action of any government. This is due to the reason that it has a vast impact on overall development of a nation. Central government notified a scheme called Service Exports from India Scheme (“SEIS”) under Foreign Trade Policy 2015-20 (“FTP”). The purpose for the scheme is to make export of Indian services more competitive in international market. SEIS replaced ‘Served From India Scheme (“SFIS”) which was introduced in past, the validity of SEIS scheme is for a period of 5 years ie., till 2020. Under SEIS scheme, incentives in the form of scrips at a rate ranging from 3% to 5% on services exporter’s net foreign exchange earnings are given to exporters of notified services which can be used for to settle the payment of duties and are also freely transferrable in open market.
The objectives of the scheme are provided under chapter 3 of FTP 2015-20 which are as follows:
The Duty Credit Scrips and goods imported/procured against these scrips shall be freely transferable. Credit Scrips may be used for payment of Basic Customs duties ie., BCD, Composition Fee, for Export Obligation (EO) defaults, Authorizations issued under Chapter 4 and Chapter 5 (i.e. Duty exemption Schemes and EPCG Scheme) of FTP 2015-2020, application fee under FTP 2015-2020, if any, and fees for permitted imports of inputs or goods, except the items listed in Appendix 3A of Hand Book Of Procedures (“HBP”) i.e. except items not allowed for import under Export from India Schemes. Once scrip are being issued, request for splits could be permitted with same port of registration for EDI enabled ports in terms of Para 3.09 of HBP. However, according to Trade Notice No. 11/2018 Dt. 30/06/2017, IGST, CGST, SGST GST and Compensation Cess, as may be applicable should be paid and may be availed as input tax credit, if eligible, in accordance with the provisions of GST.
Duty credit Scrips (“Scrips”) are nothing but incentives/rewards which are given to the eligible exporters at a notified rates. These Scrips can be used for the payment of different duties or taxes like customs duties, excise duties, service tax on the procurement of services, exchange duties and other. These credit Scrips are valid for a term of 18 months from the date of its issuance.
Service providers of eligible services are entitled to duty credit scrip at notified rates on the net foreign exchange earned by the Service providers. It is to be noted that these Scrips cannot be utilized for paying Integrated Goods and services tax (IGST) and GST Compensation Cess (if applicable) on import of goods.
Basically there are 4 categories in which a services can be delivered/exported:
|Category-1||Category -2||Category -3||Category -4|
|Cross border trade of eligible services from one country’s to the other country.||Consumption of services in abroad||Commercial presence of services of one country in the territory of another.||Presence of natural person of one country providing their service in the territory of another|
It is pertinent to note that only first two types of services are covered under SEIS and can take the incentive under the scheme.
Further, Service providers also required to satisfy below conditions for obtaining the benefits under SEIS.
1. Service provider must be located in India.
2. He must hold IEC number.
3. If he is both ie., manufacturer as well as service provider then the net foreign exchange earned by him shall be considered for services only.
4. Forth and the most vital condition can be defined as follows:
|IN CASE APPLICANT IS A COMPANY, LLP OR A PARTNERSHIP FIRM||IN CASE APPLICANT IS AN INDIVIDUAL OR SOLE PROPRIETOR|
|Minimum of $15,000 net free foreign exchange earnings shall be there in the previous financial year to apply for the application to get rewarded.||Minimum $10,000 net free foreign exchange earnings shall be there in the previous financial year to apply for the application to get rewarded.|
Here the term “Net Foreign exchange earnings” defined as under:
Net Foreign Exchange= Gross Earnings of Foreign Exchange (minus) Total payment/expenses/remittances of Foreign Exchange by the Service provider, relating to services in the Financial year.
Ineligible categories has been specified under Para 3.09 of FTP, the same can be enumerated herein below–
Foreign exchange remittances/sources of earnings:
equity or debt participation;
receipts of repayment of loans;
any other inflow of foreign exchange, unrelated to rendering of services, etc.
Export turnover relating to services of units operating under EOU / EHTP / STPI / BTP Schemes or supplies of services made to such units.
Special Provisions: Government has reserved its right if they find it in public interest, they can impose restriction /change the rate/ceiling on Duty Credit Scrip under this policy, etc.
In order to claim the benefit under SEIS, application must be filed within 12 months from the end of financial year of the claim period.
It is to be noted that the application can be filed after the aforesaid period however in that case a small late cut shall be applied (as per Para 9.02 of the HBP). Herein below is a table to understand the late cut to be imposed by the government.
|PARTICULARS||CREDIT ALLOWED ON OR BEFORE THE DUE DATE||LATE CUT RATE TO BE IMPOSED||NET ELIGIBILITY
|If Application is being received within 6 months from the last date of filing||100%||2%||98%|
|If Application is being received after 6 months but before 1 year from the last date of filing||100%||5%||95%|
|If Application is being received after a period of 12 months but before 2 year from the last date of filing.||100%||10%||90%|
Now let’s have a look on the procedure for filing of application of SEIS online:
a). Visit www.dgft.gov.in ;
b). Go to services tab;
c). In it you will find Online Ecom Application;
d). Thereafter chose the year for which application for SEIS is to be filed ie., 2015-2016 & 2016-2017, 2017-2018 & 2018-2019;
Signed copy of the following documents needs to be uploaded:
2. Application Form for Service Exports From India Scheme (SEIS) in Form ANF 3B
3. Write Up of Services as per Form ANF 3B,
4. Invoices and FIRC’S
5. RCMC certificate
6. Certificate of Chartered accountant in Annexure to ANF3B
Conclusion: Hence, one can say that it is a proactive step to boost our exports, incentive of the scheme can be claimed under Chapter-3 of FTP on services as notified under the FTP 2015-2020. Once the application is approved Duty Credit Scrips will be issued which can be used for the payment of different duties. Application can also be applied after the last date of submission however; in that case a late cut shall be deducted from eligible credit.
About Author: Praveen Singh has done his graduation from University of Delhi and currently, he is working with Letscomply as a “Compliance Head”. He is pursuing Company Secretary Course from Institute of Company Secretaries of India and he is also pursuing LLB from Rajasthan University. You can reach out Praveen Singh at: Email: [email protected]
Source- www.cbec.gov.in, https://dgft.gov.in/, www.nacenkanpur.gov.in, https://www.icai.org/, https://www.icsi.edu/home/