TaxTMI 
TaxTMI 
TaxTMI 
Introduction
- Service Exports from India Scheme (in known as SEIS) has been announced by the Government in the new Foreign Trade Policy 2015-2020, w.e.f. 1.4.2015.
- It has replaced Served From India Scheme (SFIS) which was available under the Foreign Trade Policy 2009-2014.
Features of the Scheme at a glance
- The scheme has come into effect from 01.04.2015 i.e. the rewards are admissible on exports of notified services on or after 01.04.2015.
- It applies to ‘Service Providers located in India’ instead of ‘Indian Service Providers’.
- The scheme provides for rewards, in the form of Duty Credit Scrips, to Service providers providing notified services (Notified by the Public Notice No. 3/2015-2020, dated 1.4.2015) from India, regardless of the constitution or profile of the service provider.
- The present rates of reward are 3% and 5% of Net Foreign Exchange Earned.
- The scheme has removed various kind of restrictions on use of scrip issued under this scheme, which are freely transferable.
- Scrips can be used for payment of -
- Customs duties for import of inputs or goods including capital goods, except items listed in Appendix 3A;
- Payment of excise duties on domestic procurement of inputs or goods, including capital goods and
- Payment of service tax on procurement of services
- Payment of customs duty and composition fee in case of Export Obligation defaults.
- Debits under Duty Credit Scrips are eligible for CENVAT credit or drawback. However, Basic custom duty paid through debit are eligible for drawback.
- Certain services categories are specified as not eligible for benefit under the Scheme (Para 3.09 of the Policy).
- The services and rates of rewards notified are applicable for services export made between 01.4.2015 to 30.09.2015 only. The list of services/rate is subject to review with effect from 01.10.2015.
Eligibility Criterion for Reward under the Scheme
- Service Providers of notified services must be located in India.
- However, only Services rendered in -
Mode I: Cross Border Trade - Supply of a ‘service’ from India to any other country and
Mode-2: Consumption abroad - Supply of a ‘service’ from India to service consumer(s) of any other country in India, are eligible.
- Provision of service through -
Mode 3 – Commercial Presence - i.e. Supply of a ‘service’ from India through commercial presence in any other country and
Mode 4 - Presence of natural persons i.e. Supply of a ‘service’ from India through the presence of natural persons in any other country, is not eligible for reward under the scheme.
- The notified services and rates of rewards are listed in Appendix 3D.
- Service provider should have minimum net free foreign exchange earnings of US$15,000 in preceding financial year for eligibility under the Scheme. But for Individual Service Providers and sole proprietorship, it is US$10,000 in preceding financial year.
- Scheme provides for specifying a list of services in Appendix 3E, in case of which service charges earned in Indian Rupees shall be treated as receipt in deemed foreign exchange as per RBI guidelines. The Appendix is yet to be notified.
- Net Foreign Exchange earnings for the scheme is 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.
E.g. In case of IEC holder being manufacturer of goods as well as service provider, then the foreign exchange earnings and total expenses/payment/remittances for service sector shall only be taken into account.
- To claim reward, Service provider is required to have an active IEC at the time of rendering such services.
Important Procedural Aspects of the Scheme
Filing of Application
- An application for grant of duty credit scrip for eligible services rendered shall be filed online for a financial year on annual basis in ANF 3B using digital signature.
- RA shall process the application received online after due scrutiny.
Transitional Arrangement
- Upto 30.6.15, applicants in respect of exports on which SFIS is claimed has following choices:-
- To file applications in the manner prescribed in the previous policy(ies)
- To file application under new procedure prescribed (under HBP 2015-2020) for SEIS
- From 1.7.2015, all applications to be submitted under new procedure only.
Last date of filing of application for Duty Credit Scrips
- 12 months from the end of relevant financial year of claim period.
- Wherever any application complete in all respects is received after expiry of last date for submission of such application, the application may be considered after imposing a late cut in the following manner:
i. | Application received after the expiry of last date but within six months from the last date | 2% |
ii. | Application received after six months from the prescribed date of submission but not later than one year from the prescribed date | 5% |
iii. | Application received after 12 months from the prescribed date of submission but not later than 2 years from the prescribed date | 10% |
Validity period of Duty Credit Scrips and Revalidation
- Duty Credit Scrip to be valid for a period of 18 months from the date of issue and must be valid on the date on which actual debit of duty is made.
- Revalidation of Duty Credit Scrip shall not be permitted unless validity has expired while in custody of Customs Authority/RA.