In order to encourage exports, the govt provides certain benefits to exporters. These benefits are provided to both Service Exporters as well as Exporters of Goods. In this article, we would mainly be discussing about the benefits available to Service Exporters. For incentives to Exporters of Goods, refer this article – Incentives to Exporters of Goods under the MEIS Scheme.
Service Exports from India Scheme (SEIS)
Under the SEIS Scheme, the Govt will give incentives in the range of 3% to 5% to all Service providers who are providing services from India to organisations outside India.
The Service Exports from India Scheme has been introduced in 2015 and is valid for 5 years i.e. from 2015 to 2020. This Scheme has been introduced as a part of the new Foreign Trade Policy 2015-2020 and replaces the Service from India Scheme (SFIS) which was applicable earlier.
The incentives under the SEIS Scheme are provided to all types of service providers who are located in India irrespective of the nature of organisation of the service provider. The rate of reward under SEIS which is 3% to 5% would be computed on the net foreign exchange earned.
These incentives are not given in the form of money but are given in the form of duty free credit scrip. The duty credit scrips issued under SEIS Scheme can be used for payment of various taxes levied on goods and services. These scrips are also freely transferable and can also be easily sold to some other assessee.
- Recommended Read: Uses of Duty Credit Scrips and How to sell them
Eligibility Criteria for Claiming Incentives under SEIS Scheme
- Services Eligible: Only Services rendered in Mode I: Cross Border Trade i.e. Supply of a service from India to any other country and Mode II: Consumption abroad i.e. Supply of a service from India to service consumers of any other country.
- Services not Eligible: Supply of a Service through Mode 3: Commercial Presence i.e. Supply of a service from India through Commercial Presence in any other Country and Mode 4: Presence of Natural persons in any other country – not eligible for reward under this scheme.
- To be eligible under this Scheme, the service provider shall have minimum net free foreign exchange earnings of $15,000 in the preceding financial year.
- For Individual Service Providers and Sole Proprietorships, such minimum net free foreign exchange earnings criteria is $10,000 in the preceding financial year.
- To claim the incentives, the service provider is required to have an active IEC Code at the time of rendering such services.
- In case the IEC holder is manufacturer of goods as well as service provider, then the foreign exchange earnings and Total Expenses/ payment/ remittances to be taken into account for service provider only.
Foreign Exchange which is not be considered for the purpose of Incentives
The following exchange remittances would not be considered as a part of the Net Foreign exchange earned for the purpose of claiming incentives under this scheme:-
- Foreign exchange remittances other than those earned for rendering of notified services would not be counted for entitlement.
- Other sources of foreign exchange such as equity or debt participation, donations, receipts or repayment of loans etc and any other inflow of foreign exchange, unrelated to rendering of service.
Procedure for filing of application for claiming Incentives under SEIS
- An application for grant of duty credit scrip for eligible services shall be filed online for a financial year on an annual basis in ANF – 3B using Digital Signature.
- The last date for filing an application for claiming incentives for Service Exporters under this Scheme is 12 months from the end of relevant financial year.
- The applicant shall have the option to choose Jurisdictional Regional Officer on the basis of the Corporate Office/ Registered Office/ Head Office/ Branch Office address endorsed on IEC for submitting application/ applications.
- This option for the determination of the officer shall be exercised at the beginning of the financial year.
- Once this option is exercised, no change would be allowed for claims relating to that year.
Port of Registration under SEIS
- In case of scrip applied under SEIS, the applicant can choose any port as the port of registration and mention it in the application at the appropriate column.
- The scrip would be issued with such port of Registration.
- Such Duty Credit Scrip needs to be registered at the port of Registration of duty credit. Once registered at the EDI Port for Import and at any manual port under Telegraphic Release Advice (TRA) procedure.
- In case the port of Registration is a Manual Port, TRA shall be required for imports at any other port.
Risk Management System for checking Authenticity
A Risk Management system is in operation whereby every month the Computer System in DGFT office, on random basis, selects 10% of cases for each RA where scrips have already been issued, under each RA Scheme. 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 issued or fully unutilised, without interest.
The Regional Authority may also ask for original proof of landing certificate, annexures attached to ANF’s or any other document, which has been uploaded digitally at any time within 3 years from the date of issue of scrip.
Failure to submit such documents in original would make the applicant liable to refund the rewards granted with interest. It would be the responsibility of the applicant to maintain such documents, certificate etc. for a period of atleast 3 years from the date of issuance of scrips.
Other Relevant Points for Incentives under SEIS Scheme
- Validity: These scrips are valid for a period of 18 months from the date of issue and must be valid on the date on which such actual debit of duty is made.
- Revalidation: Revalidation of such duty credit scrip is not permitted unless validity has expired while in the custody of Customs Authority/ RA.
- Splitting of Scrips: These scrips can be split if requested subject to a minimum of Rs. 5 Lakh each and multiples thereof may also be issued, at the time of application. After issuance the split certificates would be permitted with the same port of registration as appearing on the original scrips in respect of EDI enabled ports. The facility of splits not allowed after issue of scrip in case of export through non-EDI Ports.
- Attestation: Some of the annexures attached to ANF -3B, ANF – 3C, ANF – 3D are required to be signed by a Chartered Accountant/ Company Secretary/ Cost Accountant.
Rate of Incentives under SEIS Scheme for Service Exporters
The following type of Service Providers are eligible to claim incentives for export of Services at the rates mentioned below:-
Professional Services – 5% Rate of Reward
- Legal Services
- Accounting, auditing and bookkeeping services
- Taxation Services
- Architectural Services
- Engineering Services
- Integrated Engineering Services
- Urban Planning and Landscape architectural services
- Medical and Dental Services
- Veterinary Services
- Services provided by Mid-wives, nurses, physiotherapists and paramedical personnel
Research and Development Services – 5% Rate of Reward
- R&D Services on Natural Sciences
- R&D Services on Social Sciences and Humanities
- Interdisciplinary R&D Services
Rental/ Leasing Services without Operators – 5% Rate of Reward
- Relating to Ships
- Relating to Aircrafts
- Relating to other Transport Equipments
- Relating to other Machinery and Equipment
Audiovisual Services – 5% Rate of Reward
- Motion Picture and Video Tape Production and Distribution Centre
- Motion Picture Projection Service
- Radio and Television Service
- Radio and Television Transmission Service
- Sound Recording
Construction and Related Engineering Service – 5% Rate of Reward
- General Construction Work for Building
- General Construction Work for Civil Engineering
- Installation and Assembly Work
- Building Completion and Finishing Work
Educational Services – 5% Rate of Reward
- Primary Education Services
- Secondary Education Services
- Higher Education Services
- Adult Education
Environmental Services – 5% Rate of Reward
- Sewage Services
- Refuse Disposal Services
- Sanitation and Similar Services
Health and Social Services – 5% Rate of Reward
- Hospital Services
Tourism and Travel Services – 3% or 5% Rate of Reward
- Hotel (3% Rate of Reward)
- Restaurants (3% Rate of Reward)
- Travel Agencies and Tour Operator Services (5% Rate of Reward)
- Tourist Guide Services (5% Rate of Reward)
Recreational, Cultural and Sporting Services – 5% Rate of Reward
- Entertainment Services (incl. Theatre, Live Band and Circus Services)
- New Agency Services
- Libraries, Archives, Museums and other Cultural Services
- Sporting and other recreational Services
Transport and Auxiliary Services – 5% Rate of Reward
- Passenger Transportation
- Freight Transportation
- Rental of Vessels with Crew
- Maintenance and Repair of Vessels
- Pushing and Towing Services
- Supporting Services for Maritime Transport
- Rental of Aircraft with Crew
- Maintenance and Repair of Aircraft
- Airport Operations and Ground Handling
- Rental of Commercial Vehicles with Operator
- Maintenance and Repair of Road Transport Equipment
- Supporting Services for Road Transport Equipment
- Cargo Handling Services
- Storage and Warehouse Services
- Freight Transport Agency Services
Other Business Services – 3% Rate of Reward
- Advertising Services
- Market Research and Public Opinion Polling Services
- Management Consulting Service
- Services related to Management Consulting
- Technical Testing and Analysis Service
- Services incidental to Agriculture, Hunting and Forestry
- Services incidental to fishing
- Services incidental to mining
- Services incidental to manufacturing
- Services incidental to energy distribution
- Placement and Supply services of personnel
- Investigation and Security
- Related Scientific and Technical Consulting Service
- Maintenance and Repair of Equipment(not including Maritime Vessels, aircraft or other Transport Equipment)
- Building – Cleaning Services
- Photographic Services
- Packaging Services
- Convention Services