SERVICE EXPORT FROM INDIA SCHEME – SEIS
The SEIS Scheme or Service Export from India Scheme is an incentive given by the Ministry of Commerce through the Directorate General of Foreign Trade (DGFT) to Service Exporters based in India and it was introduced in foreign trade policy (2015-20) replacing the served from India scheme (SFIS). Under the scheme, service providers, located in India, would be rewarded under the SEIS scheme, for all eligible export of services from India. Service Exports from India Scheme (SEIS) aims to promote export of services from India by providing duty scrip credit for eligible exports. Example of eligible services:-
- Management consulting services, Legal services, R&D Services etc.
Rate of Reward
- Initially, rate of reward was 3% and 5% now with effect from 01.10.2017 rate of reward revised to 5% and 7%.
Duty Credit Scrip
Service providers of eligible services shall be entitled to duty credit scrip at notified rates on the net foreign exchange earned. Duty credit scrips can be used for the payment of custom duties, excise duties, service tax on procurement of services, custom duty in case of default in fulfillments of export obligation under Advance Authorization/EPCG, etc., Further, the SEIS scheme has given relaxation to the actual user condition and duty credit scrips and goods imported using duty credit scrips are freely transferable. Duty credit scrip would be valid for a period of 18 months from the date of issue.
Net foreign exchange earnings for the SEIS scheme is calculated as:
Net Foreign Exchange = Gross Earnings of Foreign Exchange – Total Expenses or payment or remittances of Foreign Exchange.
SEIS Scheme Eligibility
To be eligible, a service provider (Company / LLP / Partnership Firm) should have a minimum net free foreign exchange earnings of USD 15000 in the preceding financial yearto be eligible for duty credit scrips. For proprietorships or individual service providers, a minimum net foreign exchange earnings of USD 10,000 in the preceding financial year is required to be eligible for the scheme. Also, in order to claim reward under the SEIS scheme, the service provider shall have to have an active Import Export Code (IE Code) at the time of rendering such services for which rewards are claimed.
Foreign Exchange or Remittance Ineligible under SEIS Scheme
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.
Time Limit for Filling Application for Duty Credit Scrips
An application for obtaining Duty Credit Scrip shall be filed within a period of 12 months from the end of relevant financial year of claim period. Such application is filed online for a financial year on annual basis in form ANF 3B (Aayaat-Niryaat Forms) using digital signature. The application can also be filed later with some limitations and applicability of late cut fee.
Author: CA Saurabh Gupta, Sharukh Ali