Government of India has introduced the Service Exports from India Scheme (SEIS) under the Foreign Trade Policy (FTP) - 2015-20, replacing the earlier scheme 'Served from India Scheme’ under Foreign Trade Policy, 2009-15. The main objective of the scheme is to make our services globally competitive in terms of price. Under SEIS, the services providers of notified services are incentivized in the form of Duty Credit Scrips at the rate of 3 or 5% 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. The rewards under SEIS shall be admissible for export of services rendered on or after 01.04.2015, i.e. the date of notification of the Foreign Trade Policy 2015-20.
To avail SEIS benefits –
Service provider should have minimum net free foreign exchange earnings of US$15,000 in the year of rendering the services.
For Individual Service Providers and sole proprietorship, such minimum net free foreign exchange earnings criteria would be US$10,000 in financial year when the services have been rendered.
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. Once the service provider fulfils the above eligibility conditions, he can claim the benefits of SEIS in the form of Duty Credit Scrips but only for those services which are listed in Appendix 3D (Attachment Given at the bottom of page along with rate of rewards).
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.
Net Foreign exchange earnings for the scheme are defined as under
Net Foreign Exchange = Gross Earnings of Foreign Exchange minus Total expenses / payment / remittances of Foreign Exchange by the IEC holder, relating to service sector in the Financial year.
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.
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.
A company looking to secure SEIS investment must have no more than 25 employees, whilst those looking to secure EIS investment must have no more than 250 employees. To be eligible for SEIS funding, a company must have been trading for less than 2 year.
Services Eligible to Claim Benefits under the SEIS:
Service Exports from India Scheme (SEIS) is a reward computed based on the ‘net’ free foreign exchange realized and the percentage of this reward is specified in Appendix 3D of the Foreign Trade Policy 2015-20.
The various services eligible to claim benefits under the SEIS are enumerated in the following paragraphs.
Audio visual services: Motion picture and video tape production and distribution service, Motion picture projection service, Radio and television services, Radio and television transmission services, Sound recording
A. Professional services 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 midwives, nurses, physiotherapists and paramedical personnel.
Research and development services R&D services on natural sciences, R&D services on social sciences and humanities, Interdisciplinary R&D services.
C. Rental/Leasing services without operators Relating to ships, aircraft, other transport equipment, and other machinery and equipment
D. Other business services eligible Advertising services, Market research and public opinion polling services Management consulting service, Services related to management consulting, Technical testing and analysis services, Services incidental to agricultural, 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 services, Maintenance and repair of equipment (excluding maritime vessels, aircraft or other transport equipment), Building cleaning services, Photographic services, Packaging services, Printing, publishing and Convention services.
Construction and related engineering services
General Construction work for building, General Construction work for Civil Engineering, Installation and assembly work, Building completion and finishing work
Sewage services, Refuse disposal services, Sanitation and similar services
Health-related and Social Services.
Tourism and Travel-related Services.
A. Hotels and Restaurants (including catering)
B. Travel agencies and tour operator’s services
C. Tourist guides services
Recreational, cultural and sporting services
Entertainment services (including theatre, live bands and circus services), News agency services, Libraries, archives, museums and other cultural services, Sporting and other recreational services.
A. Maritime Transport Services Passenger transportation (Operations from India by Indian Flag Carriers only is allowed under Maritime transport services), Freight Transportation (Operations from India by Indian Flag Carriers only is allowed under Maritime transport services), Rental of vessels with crew (Operations from India by Indian Flag Carriers only is allowed under Maritime transport services), Maintenance and repair of vessels, Pushing and towing services, Supporting services for maritime transport.
B. Air transport services Rental of aircraft with crew, Maintenance and repair of aircraft, Airport Operations and ground handling.
C. Road Transport Services
Passenger transportation, Freight transportation, Rental of Commercial vehicles with operator, Maintenance and repair of road transport equipment, supporting services for road transport services.
D. Services Auxiliary to All Modes of Transport
Cargo-handling services, Storage and warehouse services, Freight transport agency services. Benefit allowed under this scheme is 3% to 5% as per nature of services supplied but the same cannot be used for the payment of GST as per trade notice no. 11/2017 dated 30th June 2017 issued by DGFT.
Apply for SEIS Benefits
An Online Application needs to be filed on the DGFT Server and the relevant fields of information need to be entered in the SEIS ECOM Module. All the relevant forms which are ANF3B and Annexure to ANF3B are available online. You may also refer the link http://dgft.gov.in/links/appendices-and-anf-ftp2015-2020 on the DGFT Server to view the Forms applicable for SEIS Application.
Registration with Service export Promotion Council
Whether you are a manufacturer or a services provider, RCMC (Registration Cum Membership Certificate) from the relevant export promotion council is compulsory in your main line of business. As per Public Notice No. 26/2015-2020 dated 01.08.2018 issued by Directorate General of Foreign Trade, Department of Commerce to add an “Others” category in list of 14 service sectors of SEPC. Now all the services are covered by SEPC along with 14 service sectors explicitly mentioned earlier. Therefore, if you are a services provider and want to avail SEIS incentives, then SEPC RCMC is compulsory.
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, GST on procurement of services, custom duty in case of default in fulfilment 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.
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.
The information on Service Exports from India Scheme (SEIS) is detailed above. Comment below your thoughts on Service Exports from India Scheme (SEIS).