SERVICE EXPORTS FROM INDIA SCHEME (SIES) INTRODUCED BY LATEST FOREIGN TRADE POLICY 2015-2020 A TOOLS TO ENCOURAGE EXPORT:
Service Exports from India Scheme (SIES) has been introduced through the latest Foreign Trade Policy 2015-2020 as a tool to encourage export of notified Services from India. It replaces the Served from India Scheme (SFIS) that was introduced in the Foreign Trade Policy 2004-2009.
Service Exports from India Scheme (SEIS) mainly aims to encourage the export of services from India by providing duty scrip credit for eligible exports. Under the scheme, service providers, located in India, would be rewarded under the SEIS scheme, for the eligible export of services from India. In this article, we look at the Service Exports from India Scheme in expending. Service Exports from India Scheme was earlier termed as Served from India Scheme (SFIS).
Eligible Service Providers:
All types of Service Providers (i.e. Companies, partnerships, Proprietorship) providing notified services will be eligible for SEIS if they are providing services as per any of the two specified modes (out of four modes).
|Mode||Title of Mode||Description||Eligible for SEIS|
|1||Cross border trade||Supply of a ‘service’ from India to any other country||Yes|
|2||Consumption abroad||Supply of a ‘service’ from India to service consumer(s) of any other country in India||Yes|
|3||Commercial Presence||Supply of a ‘service’ from India through commercial presence in any other country||No|
|4||Presence of natural persons||Supply of a ‘service’ from India through the presence of natural persons in any other country||No|
Calculation of Benefits:
The first step in the calculation of scheme benefits is to arrive at the figure of Net Foreign Exchange earned during the particular financial year as per the following formula:
Net Foreign Exchange = Gross Earnings of Foreign Exchange minus (-) Total expenses/payment/remittances of Foreign Exchange by the IEC holder, relating to the service sector in the Financial year – Once Net Foreign Exchange earnings are calculated, the next step is to find out the applicable rate as per the services being exported.
At the starting of the scheme, DGFT notified the rates between 3 to 5% of the Net Foreign Exchange earnings. However, later on, these rates were increased by 2% and the applicable rate of benefit under SEIS is in the range of 5 to 7% with effect from 1st November’2017 and applicable till 31st March’2018.
Following are the reward rates notified under the Annexure to Appendix 3D of The Foreign Trade Policy 2015-2020:
|Reward Rates (from 1.4.15
|Reward Rates (from 1.1.17 to
|Professional Services (Legal, Accounting, Tax, Medical, etc.)||5%||7%|
|Research & Development Services||5%||7%|
|Rental/Leasing services without operators||5%||7%|
|Other Business Services||3%||5%|
|Construction & Related Engineering Services||5%||7%|
(from 1.1.17 to
|Health-Related and Social Services||5%||7%|
|Tourism and Travel Related Services||3-5%||5-7%|
|Recreational, Cultural and Sporting Services (other than audiovisual services)||5%||7%|
|Maritime Transport Services||5%||7%|
|Air Transport Services||5%||7%|
|Road Transport Services||5%||7%|
|Services auxiliary to all modes of Transport||5%||7%|
The procedure of filing an application for benefit under the scheme SEIS:
- Application to claim the benefit under SEIS is filed in Form ANF 3B online using a digital signature.
- This application contains one part which needs to be certified by a practicing Chartered Accountant.
- A physical copy of the application along with all supporting documents also needs to be submitted to the jurisdictional office of DGFT.
- A small fee of Rs. 1000 is paid at the time of filing the application.
- Application once filed, can’t be revised online.
- The exchange rate for each year is notified to calculate the value of duty credit scrip.
- Application for each financial year is filed separately.
Other important points about SEIS:
- The duty credit scrip can be utilized for the payment of basic customs duty for the procurement of eligible inputs and capital goods.
- The scrip is freely transferable i.e. the service exporter can sell the scrip to any other person.
- The duty credit scrip shall be valid for a period of 24 months from the date of its issue.
- An application for obtaining duty credit scrip shall be filed within a period of 12 months from the relevant financial year of the claim period.
|Period of delay in filing the claim||Late cut %|
|Application received after the expiry of the last date but within six months from the last date||2%|
|Application received after six months from the prescribed date of submission but not later than one year from the prescribed date||5%|
|Application received after 12 months from the prescribed date of submission but not later than 2 years from the prescribed date||10%|
Ineligible categories under SEIS:
(1) 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.
(2) Following shall not be taken into account for the calculation of entitlement under the scheme
(a) Foreign Exchange remittances:
- Related to the Financial Services Sector:
(i) Raising of all types of foreign currency loans;
(ii) Export precedes the realization of clients;
(iii) Issuance of Foreign Equity through ADRs / GDRs or other similar instruments;
(iv) Issuance of foreign currency Bonds;
(v) Sale of securities and other financial instruments;
(vi) Other receivables not connected with services rendered by financial institutions; and
- Earned through contract/regular employment abroad (e.g. labor remittances):
(b) Payments for services received from EEFC Account;
(c) Foreign exchange turnover by Healthcare Institutions like equity participation, donations, etc.
(d) Foreign exchange turnover by Educational Institutions like equity participation, donations, etc.
(e) Export turnover relating to services of units operating under SEZ / EOU / EHTP / STPI / BTP Schemes or supplies of services made to such units;
(f) Clubbing of turnover of services rendered by SEZ / EOU /EHTP / STPI / BTP units with turnover of DTA Service Providers;
(g) Exports of Goods.
(h) Foreign Exchange earnings for services provided by Airlines, Shipping lines service providers plying from any foreign country X to any foreign country Y routes not touching India at all.
(i) Service providers in Telecom Sector.
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