Service Exports from India Scheme (SEIS)

1. INTRODUCTION

In the new Foreign Trade Policy-2015-20, with effect from 01.04.2015, a service Exports from India Scheme (SEIS) has been announced by the Government. It not only replaces Served from India Scheme (SFIS) available under the Foreign Trade Policy-2009-2014, but it rationalize the incentives under the erstwhile schemes, removes various kind of restriction of use of scrip issued under the Scheme and significantly enlarges the scope of the earlier scheme. Unlike earlier Scheme, this scheme has been made applicable to exports by SEZ units also.

SEIS shall apply to “Service Providers located in India” instead of Indian Service Providers. Thus SEIS provides for rewards to all service providers to notified services, who are providing services from India Scheme, regardless of the constitution or profile of the service provider, The Present rates of reward are 3% and 5% of net foreign Exchange Earning.

2. OBJECTIVE OF THE SCHEME

Objective of Service Exports from India Scheme (SEIS) is to encourage export of notified Services from India. This Scheme has been announced on 01.04.2015 under the New Foreign Trade Policy-2015-2020 and has come into effect from 01.04.2015. In other words, the rewards under the scheme are admissible on exports of notified services rendered on or after 01.04.2015.

3. SALIENT FEATURES OF THE SCHEME AT A GLANCE

• Apply to “Service Providers located in India” instead of Indian Service Providers.
• Provides for rewards to all Service providers of notified services, who are providing exporting services from India, regardless of the constitution or profile of the service provider.
• Rewards under SEIS are based on net foreign exchange earned. (Net foreign Exchange = Gross earning of foreign exchange-total expenses/payment/remittances relating to services sector in the F/Y.)

• Reward issued as duty credit scrip is freely transferable and usable for all types of goods.
• Debits are eligible for CENVAT credit or drawback.
• Certain specified categories of services are not eligible for benefit under the Scheme.
• Scrip can be used for payment of (i) Customs Duties for import of inputs or goods, except items listed in Appendix 3A; (ii) Payment of excise duties on domestic procurement of inputs or goods, including capital goods (iii) Payment of service tax on procurement of services and (iv) payment of Customs Duty and fee (in case of bona fide default under authorization)
• The services and rates of rewards notified are applicable for services exports made between 01.04.2015 to 31.03.2016.

or after 01.04.2015.

5. FOUR MODES OF DELIVERY OF SERVICES IN CROSS BORDER TRADE UNDER GATS.

General Agreement on Trade in Services (GATS) covers four modes of delivery of services in cross border Trade. Four modes of supply of services with example explained hereunder:-

6. ELIGIBILITY CRITERION FOR REWARD UNDER THE SCHEME (REF: PARA 3.08 OF THE FTP)

• Service Providers of notified services, located in India, shall be rewarded under SEIS, subject to conditions as may be notified.
• To claim reward under the scheme, Service provider shall have an active IEC at the time of rendering such services for which rewards are claimed.
• Services rendered in Mode 1: Cross Border Trade and Mode-2: Consumption abroad only will be eligible.
• The notified services and rates of rewards are listed in Appendix 3D.
• Have minimum net free foreign exchange earnings of US$15,000 in preceding financial year for eligibility under the Scheme.
• For Individual Service Providers and sole proprietorship, such minimum net free foreign exchange earnings criteria would be US$10,000 in preceding financial year.
• Payment in Indian Rupees for service charges earned on specified services (Listed in Appendix 3E) to be treated as receipt in deemed foreign exchange.
• In case of 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.

7. INELIGIBLE CATEGORIES UNDER SEIS (REF: PARA 3.09 OF THE FTP)

• Supply of service through Mode-3- Commercial Presence and Mode-4 presence of natural persons are not eligible under SEIS.
• Foreign exchange remittances other than those earned for rendering of notified services would not be counted for entitlement.
• 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- Not Eligible for benefit under the Scheme.
• Following is not to be considered for calculation of entitlement under the scheme

Foreign Exchange Remittances:-
Related to Financial Services Sector
(i) Raising of all types of foreign currency Loans;
(ii) Export proceeds 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. labour remittances);

(i) Payments for services received from EEFC Account;
(ii) Foreign exchange turnover by Healthcare Institutions like equity participation, donations etc.
(iii) Foreign exchange turnover by Educational Institutions like equity participation, donations etc.
(iv) Export turnover relating to services of units operating under EOU / EHTP / STPI / BTP Schemes or supplies of services made to such units;
(v) Clubbing of turnover of services rendered by SEZ / EOU /EHTP / STPI / BTP units with turnover of DTA Service Providers;
(vi) Exports of Goods.
(vii) 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.
(viii) Service providers in Telecom Sector.