Service Export Incentive Scheme (SEIS)

Under the latest Foreign Trade Policy (FTP), a new scheme called Service Exports from India Scheme (SEIS) is introduced to encourage export services from India. An incentive of (in the span of 3 to 5%) of the net foreign earning is permitted to entitled service providers. Such enticement under the scheme is given in duty credit scrip, which is freely assignable. The scrip so remunerated under this scheme shall be valid for 18 months from the date of its issue.

SEIS can be availed by service providers for services that the government has notified. As per the SEIS Scheme, exporters of Services notified under the scheme can claim duty-free credit script at the specified rate of 5% & 3%.

Eligibility criteria
Service providers of notified services detected in India are entitled to the scheme. There is a requirement that a service provider (Company/LLP/Partnership) must have foreign exchange earnings of USD 15000 in the preceding financial year to be entitled to a duty-free script. Still, for proprietorships & Individuals, it is USD 10000. Also, the Service provider must have an active IEC (Import export Certificate) to be eligible for the scheme. In addition, the service provider is necessary to have a membership of the Service Export Promotion Council (SEPC). Services rendered in the following manner are eligible:

• Supply of service from India to any other country.
• Supply of service from India consumers of any other country.

Services eligible for SEIS benefits
Following are the services eligible for SEIS benefits:

• Business services
• Construction and related engineering services
• Educational services
• Environmental services
• Health-related and social services
• Tourism and travel-related services
• Recreational, cultural and sporting services
• Transport services
• Professional services
• Research & development services
• Rental/leasing without operators
• Audiovisual services

Following to be excluded from the calculation of entitlement under the scheme:

1. Foreign exchange remittances (proceeds of foreign currency loans, bonds, sale of securities, foreign equity through ADRs / GDRs or other similar instruments).
2. Payments for services obtained from EEFC account;
3. Foreign exchange turnover by healthcare institutions like equity involvement, donations etc.;
4. Foreign exchange turnover by educational institutions like equity involvement, donations etc.;
5. Export turnover referring to services of units operating under SEZ / EOU / EHTP / STPI / BTP schemes or supplies of services made to such units;
6. Clubbing of turnover of services furnished by SEZ / EOU /EHTP / STPI / BTP units with turnover of DTA Service Providers;
7. Exports of goods.
8. Foreign exchange earnings for services required by airlines, shipping lines, service providers plying from any foreign country X to any foreign country Y routes not affecting India;
9. Service providers in the telecom sector.
10. Earned through contract/consistent employment abroad (e.g. labour remittances)

Duty credit script
Service providers of notified services are entitled to duty credit Script at reported rates on net foreign exchange earnings. The duty credit scripts can be utilized to pay customs duties, excise duties, service tax on services procurement. Duty-free credit scripts are freely transferable and have a validity of 18 months from the date of issue. Application to assert the benefit must be filed before 12 months from the end of the relevant financial year of the claim period. 

How to apply for SEIS benefits?
An online application must be filed on the DGFT server, and the relevant information fields must be entered in the SEIS ECOM module. All the appropriate forms, which are ANF 3B, are available online. You may also refer to the link http://dgft.gov.in/links/appendices-and-anf-ftp2015-2020 on the DGFT server to view the conditions applicable for the SEIS application.

Foreign exchange or remuneration ineligible under the SEIS scheme
Foreign exchange remuneration other than those earned for rendering of notified services would not be computed for permission. Thus, other sources of foreign exchange earnings such as equity or debt participation, donations, notice of refund of loans etc. and any further inflow of foreign exchange, unrelated to rendering of service, would be ineligible.

At MAS, we assist our clients in dealing with SEIS registrations, obtaining import-export licenses, reviewing SEIS certificates, and providing them with adequate support and guidance from our end. If you have any questions or wish to know more about the SEIS scheme, kindly contact us.