Service Exporters, You can still avail benefits of upto 5% of Net Foreign Exchange earnings.
Service Exports from India Scheme (SEIS) is an incentive given by the Ministry of Commerce through the Directorate General of Foreign Trade (DGFT) to Service Exporters based in India. This reward scheme is to promote the export of services from India. The scheme is applicable for the years 2015-2020 and applications for years 17-18, 18-19 can be made till 31st March 2021 and for 19-20 would open soon.
So if you are a service exporter who has earned valuable foreign exchange for India, there maybe a benefit of 3-5% of net foreign exchange earned that may accrue to you as Duty credit Scrips (DCS). These SEIS scrips can be used to pay Import duty or can be encashed by selling it to any Importer. Therefore, it is as good as cash Incentive Scheme.
Giving an example, if your company provided Business Support Services to your parent entity or a foreign business, and earned a revenue of USD 1mn (INR 7.5 Crores) in the last year, you may be able to apply for an incentive of 3-5% on your net foreign exchange earnings. Assuming your incentive is available at 5%, you may be issued SEIS scrips of INR 37.50 Lacs. Such scrips can freely be sold in the market to realize money which will be treated as other Income for your business. Technically, for export businesses, such incentive adds between 3-5 % to the bottomline of the export services businesses. The incentive is also available to merchant exporters through a separate scheme (MEIS).
Who is Eligible for the SEIS Scheme ?
- Service providers of notified Services, are only eligible for Service Export from India Scheme. Some examples are services included for incentive are below:
- Legal Services, Accounting services, Taxation & Engineering Services
- Research & Development Services
- Business Support services in India
- Services in relation to Rental of ships, aircraft, machinery & transport equipment.
- Advertising & Market research activities
- Education services and other services
2. To claim SEIS Benefit, The Service Exporter should have an Active IEC (Importer Exporter Code). For Example if the Company ABC has taken an IEC on 01.04.2017, then services provided by company after 01.04.2017 will be eligible to claim SEIS.
3. Eligible Service Exporter (Company, LLP or Partnership) should have a minimum net forex earnings of USD 15000 in the year for which SEIS application is being made.
Similarly, Individuals and Sole Proprietors should have minimum net free foreign exchange earnings of 10,000 USD to be eligible to apply under the Service Export from India Scheme.
4. Net Foreign Exchange Earnings = Gross Foreign Exchange Earnings – Total Foreign Exchange Payments/ Remittances/ Expenses bore by the Service provider in the financial year.
List of Documents required for the Scheme
- Importer Exporter Code (IEC Code)
- Application form ANF-3B (Aayat Niryat Form)
- CA Certificate
- Statement showing the nexus between Invoices and FIRC’s
- Write up of Services
- Self–Certified copy of invoice and FIRC’s
- DGFT Digital Signature Certificate (DSC)
- RCMC Copy
- Necessary Declarations
SEIS Application should be made to jurisdictional DGFT offices. Claim for a financial year may be rejected if it is made after 3 Years from the end of the FY. The last date of filing claim for FY 2017-18 will be 31.03.2021.