SEIS, FTP, Exporters

1. Service Export from India Scheme (SEIS)
Exporters Bonanza
By
Gaurav Arya
Chartered Accountant
(Author can be reached at +91-9560607530 or
gaauravarya@gmail.com)

2. The big question now a days is whether the export incentives are going to be
scrapped?
1. India lost the case against United States of America (USA) in World Trade Organisation
(WTO).
2. USA alleged that India is violating the provisions of Subsidies and Countervailing
Measurers Agreement (SCM) by giving export rewards to its exporters in form of various
schemes.
3. India needs to withdraw all the export schemes where it is rewarding the exporters
through various schemes like Merchandise Export from India Scheme, Export Promotion
Capital Goods, Special Economic Zone, Duty Free Imports for Exporters, EOU/BTP/EHTP
Schemes etc.
4. SCM doesn’t permit the countries to give rewards to exporters where the per capita
income is more than USD 1000 consecutively for three years. India has crossed this
threshold in Year 2015. In 2017, the WTO notified that India’s GNI was $1,051 in 2013,
$1,100 in 2014 and $1,178 in 2015.
5. However, India has filed an appeal against this decision with WTO appellate tribunal and
the bench is not working due to lack of quorum.
6. It is pertinent to note that Service Export from India Scheme and Advance Authorisation
Scheme has not been challenged by USA.

3. Then what is the fate of these export incentive schemes?
Government of India has announced scheme of
Remission of Duties and Taxes on Exported Products (RoDTEP)
to compensate the exporters. It will allow reimbursement taxes
and duties paid by them such as value added tax, coal cess, mandi
tax, electricity duties and fuel used for transportation, which are
not getting exempted or refunded under any other existing
mechanism but are incurred in the process of manufacture or
distribution of exported products. It seems to be India
government is doing its own preparation before the decision of
tribunal by giving cabinet approval to this scheme on 13th March,
2020.
RoDTEP seems to be replacement of Merchandise Export from
India Scheme (MEIS) that was found to violate the World Trade
Organization Rules. However, picture will be clearer once the draft
of scheme come into existence.

4. Covid -19 Impacts
Notification – 57/2015-20,
Public Notice No. -67/2015-20 and
Trade Notice No. 60/2019-20 (All dated – 31st
March, 2020)
 FTP Validity extended to more one year i.e. 31st
March, 2021
 RCMC validity extended from 31st March, 2021 to
30th September, 2020
 SEIS for FY 2018-19 can be filed upto 31st
December, 2020
 For SEIS for FY 2019-20 – Service Category and
rate of scrips to be notified separately
 SEIS for FY 2020-21 – Decision on continuation
to be taken subsequently

5. Exporters Bonanza
 If you are exporting the services, your net profit can be increased by 5% to
7% because Indian government is giving incentive on service exports?
 There is a scheme Service Export from India Scheme (SEIS)in Foreign Trade
Policy 2015-20 where Government of India has notified various eligible
services, rates & conditions for rewards.
 Governing act of Foreign Trade Policy 2015-2020 is The Foreign Trade
(Development and Regulation) Act, 1992.(Hereinafter Referred As ‘FTDRA,
1992’)
 However, India has lost case against USA in WTO and the fate of all export
incentive schemes are in danger. Fortunately, SEIS scheme has not been
challenged by USA
 Let us understand about the Service Export from India Scheme in Frequently
Asked Questions (FAQ) format.

6. What is ‘Service’? (Para – 9.50)
 “Service” Includes all tradable services covered under General
Agreement on Trade in Services (GATS) and earning Free Foreign
Exchange
 The GATS define services in four ‘modes’ of supply: cross-border trade,
consumption abroad, commercial presence, and presence of natural
persons.
Objectives of SEIS
 Provide exporters a level playing field;
 Exports to be globally competitive;
 Rewards to offset infrastructural inefficiencies and associated costs
involved.
 Encourage and maximise the exports of notified services from India;

7. Who is a ‘Service Provider’ Under Foreign
Trade Policy 2015-20?
As per Para 9.51 of FTP, Service Provider means a person providing:
(i) Mode1- Cross border trade - Supply of a ‘service’ from India to any other country e.g.
BPO/KPO/ITES services, consultancy etc.
(ii) Mode 2- Consumption abroad - Supply of a ‘service’ from India to service consumer(s)
of any other country e.g.: tourism, educational services, medical treatment etc.
(iii) Mode 3 – Commercial Presence - Supply of a ‘service’ from India through commercial
presence in any other countrye.g.: banking, hotel etc.
(iv) Mode 4- Presence of natural persons - Supply of a ‘service’ from India through the
presence of natural persons in any other country like doctor, nurse, IT engineer etc.
functioning as a consultant, employee, from one country to another.
 SEIS benefit is available for Mode 1 and Mode 2 only.
 SEIS benefit is not available for Mode 3 and Mode 4.

8. Reward Rates:
 As per Appendix 3D of Foreign Trade Policy 2015 - 20, reward rates for
various services are as follows: -
Sectors Services Rate
Professional Services Legal Services, Taxation, Accounting and
Bookkeeping, Architectural, Engineering,
Medical and Dental
7%
Research and
Development Services
R&D – Natural Sciences, Social Sciences
and Humanities, Interdisciplinary R&D
7%
Rental/Leasing services
without operators
Ships, Aircraft, Other Transport equipment
and other machinery & equipment
7%
Other business services •Advertising services
•Market research and public opinion
polling services
•Management consulting service
•Technical testing and analysis services
5%

9. Services Rate
Other business
services
•Services incidental to agricultural, hunting and forestry,
fishing, mining, manufacturing and energy distribution
•Placement and supply services of personnel,
•Investigation and security
•Related scientific and technical consulting services
•Maintenance and repair of equipment (not including
maritime vessels, aircraft or other transport equipment)
•Services of Building cleaning, Photographic, Packaging,
Printing, publishing , Convention and Hospital
5%
Tourism and
Travel Related
Services
Hotel and Restaurants
Travel Agencies, Tour Operators and Tour Guides
5%
7%
Recreational,
Cultural and
Sporting Services
Entertainment Services (Including – Theatre, Live Bands
and Circus Services), News Agency Services, Libraries,
Archives, Museum, Cultural Activities, Sporting and other
recreational activities
7%

10. Sectors Services Rate
Transport Services Maritime Transportation,
Air Transport and Road
Transport Services include
auxiliary services to all
modes of transport like
warehousing, cargo
handling etc.
7%
Construction and
Engineering related
services
General construction work
for building, civil
construction, installation
and assembly work and
building completion and
finishing work.
7%
Educational Services Primary, Secondary, Higher
and adult education
services
7%
Environmental Services Sewage, Refuse Disposal
and Sanitation Services
7%
Health Related and Social
Services
Hospital Services 7%

11. What are the eligibility criteria for claiming
rewards under SEIS?
 Services rendered should fall under the definition of “Service” of
“Foreign Trade Policy
 Service Provider should have minimum Net free Foreign Exchange
Earnings of US$ 15,000 and individual service providers and sole
proprietorship US $ 10,000 in year of rendering service
 Service provider must have active IEC Code at the time of rendering of
services

12. Who are not eligible for claiming rewards under SEIS?
As per Para 3.09 of FTP, SEIS benefit is not allowed if the Foreign exchange
remittances/sources of earnings in form of
 Other than those earned for rendering of notified Services would not be
counted for entitlement.
 any other inflow of foreign exchange, unrelated to rendering of services, etc.
 Export turnover relating to services of units operating under EOU / EHTP /
STPI / BTP Schemes or supplies of services made to such units.
 Related to Financial Service Sector – Foreign remittance earned through
 Export Proceeds Realization of Clients
 Issuance of Foreign Equity through ADRs/GDSRs or other similar instruments
 Issuance of Foreign Currency Bonds
 Raising all type of Foreign Currency Loans
 Sale of Securities and other Financial Instruments
 Other receivables not connected with services rendered by financial
institutions

13.  Equity or debt participation.
 Receipts of repayment of loans.
 Donations.
 Earned through contract/regular employment abroad (e.g. labour remittances)
 Export of goods
 Clubbing of turnover of services rendered by SEZ / EOU/ EHTP/ STPI/BTP units
with turnover of DTA Service Providers
 Payments for services received from EEFC Account;
 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
 Service providers in Telecom Sector

14. How to calculate Foreign Exchange Earnings (FEE)?
*Net Foreign Exchange Earnings = Gross Earnings of Foreign
Exchange – Total Expenses/Payment/Remittances of Foreign
Exchange by the IEC holder, relating to service sector in the
Financial Year
What is the effective date of scheme?
The Rewards under MEIS/SEIS shall be admissible for
exports made/services rendered on or after the date of
notification of this policy.

15. What is the last date of filing of application for
Duty Scrips ?
 For SEIS, the last date for filing application shall be 12
months from the end of relevant Financial year of claim
period.
 However, if you are late – Than don’t worry – DGFT is very
much liberal, they will give you incentive with a late filing
cut. Incentive will be given as per below table: -

16. Sr. No. Particulars Late Cut
Rate
Incentive
1 Application received after the expiry of last date
but within six months from the last date (0 to 6
Months)
2% 98%
2 Application received after six months from the
prescribed date of submission but not later than
one year from the prescribed date (7th Month to
12th Month)
5% 95%
3 Application received after 12 months from the
prescribed date of submission but not later than
2 years from the prescribed date (8th Month to
24th Month)
10% 90%

17. SEIS claim cannot be filed beyond 31stMarch 2022 for the FY 2018-
19. In nutshell, a person can file claim within 3 years of end of
financial year.
 For example if a Service Provider applied for SEIS within 6 months
of expiry of due date, he will get 98% of the eligible claim but if
applied with a more delay than the claim amount will get reduced
to 95% to 90% depends upon when he has applied.
 Let us understand by an example – For the FY 2018-19, due date
for filing application for reward under SEIS scheme is 31stMarch
2020
 If claim is filed after 31stMarch 2020 but before 30thSeptember
2020 – He is eligible for 98% of rewards.
 If claim is filed between 1stOctober 2020 to 31stMarch 2021 – He is
eligible for 95% of rewards
 If claim is filed between 1stApril 2021 to 31stMarch 2022 – He is
eligible for 90% of rewards

18. Where SEIS Scrip Can be Used?
In payment of taxes like customs duties, excise duties, service tax on the procurement of
services, exchange duties and other.
Scrips cannot be utilized for payment of GST.
Scrips are transferable.
There is no GST on sale of scrips.
What is the validity of the Scrips?
These credit Scrips are valid for a term of 24 months from the date of its issuance.(Public
Notice No. 33/2015-2020 dated 23.10.2017)
Issuing hard copy of physical duty credits scrips had been discontinued w.e.f. 10.04.2019
and made it online for easy of doing business as per Trade Notice No.03/2015-2020 dated
03.04.2019

19. What are the points to be Ponder?
 Directorate General Foreign Trade (DGFT) Headquarter
randomly select 10% of cases through computer system for
each Regional Authority (RA) where scrips have already
been issued, under each scheme.
 Documents to be maintained for the period of three years
from the issuance of scrips as Regional Authority may ask
for original proof of landing certificate, annexures attached
to the application form or any other document.

20. Government views on SEIS –
Commerce Minister Piyush Goyal Proposes to discontinue export
incentives for services exports under SEIS in present form
 Proposal to discontinue SEIS as it has not helped India in "increase shipments positively".
 Proposal to discontinue this SEIS in its current form. There is view that it has not helped
us to increase our exports positively,
 He said that industry has to get out of the mind set of subsidies as they are detrimental
to India's long-term interests.
 Only 2200 Companies take that take that subsidy. Some of them are such large names,
making 1000s of crores of rupees of profit, that there is no business of giving them a
subsidy," he said.
 The minister wondered that if those big companies do not get this subsidy, will they stop
providing those services.
 He suggested that the subsidy can be used to promote sectors like
tourism."...tourism...has huge untapped potential... which are the areas where we need
targeted support for a defined time frame to get better value addition," he added.

21. General Discussion
 Penalty Provisions for wrongly availment of
rewards –
Maximum of following - Rs. 10,000 and maximum to 5
times of rewards (Section 11 of FTDRA Act, 1994)
 Expectations from DGFT
 Standard Operating Procedures for the whole process
specially documentation
Accountability of officers – To issue the scrips on time. Its
saying – Incentive delay is equal to incentive denied
Waive of the condition to having active IEC at time of
rendering services
 Follow the due process of law – while rejecting claims –
Opportunity of being heard must be given
 Professional Opportunities
- In Assistance in sale of scrips

22. Thank
You