What is SEIS ?
Exporter of certain Services are given incentives in form of Duty Credit Scrip which are freely transferable. These incentives are given to offset infrastructure and associated costs involved.
Duty credit Scrip’s (herein after referred to as ‘scrips’) can be used for payment of custom duty and central excise duty (where applicable). GST can’t be paid using these scrips.
Eligibility
Notified Services and Service Providers
Reward shall be given if Services provided are notified in Appendix 3D and service provider is located in India.
In order to be eligible for SEIS it is necessary that supply of services should be from India to service consumer of and/or any other country.
Supply of services from India through commercial presence and/or presence of natural person in any other country shall not be eligible.
Eligibility for SEIS can be ascertained from table below
| Type of Service Provider | Eligibility | |
| Cross border trade | Supply of a ‘service’ from India to any other country | Eligible |
| Consumption abroad | Supply of a ‘service’ from India to service consumer(s) of any other country | Eligible |
| Commercial presence | Supply of a ‘service’ from India through commercial presence in any other country | Ineligible |
| Presence of natural persons | Supply of a ‘service’ from India through the presence of natural persons in any other country | Ineligible |
Net Foreign Exchange Earning
Net Foreign Exchange with respect to IEC holder, relating to service sector in Financial Year shall be calculated in manner mentioned below
Gross earnings of foreign exchange (-) Total expenses/ payment/ remittance of foreign exchange
If the 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.
Remittances through Credit Card and other instruments for MEIS and SEIS
Free Foreign Exchange earned through international credit cards and other instruments, as permitted by RBI shall also be taken into account for computation of value of exports.
Deemed Foreign Exchange if payment in INR (Appendix 3E)
Services which are mentioned in Appendix 3E; Payment in Indian Rupees for service charges earned on specified services shall be treated as receipt in deemed foreign exchange as per guidelines of RBI.
Minimum Net Foreign Exchange Earning
| Service Provider | Minimum Net Foreign Exchange Earning |
| Individual and Sole Proprietor | USD $ 10,000 in preceding Financial Year |
| Other Service Providers | USD $ 15,000 in preceding Financial year |
Active IEC
In order to claim reward under the scheme, Service provider must hold an active IEC at the time of rendering such services for which rewards are claimed.
Ineligible categories under SEIS
Foreign exchange remittances other than those earned for rendering of notified services would not be counted for entitlement.
Following shall not be taken into account 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)
- Related to Financial Services Sector
- Payments for services received from EEFC Account;
- Foreign exchange turnover by Healthcare Institutions like equity participation, donations etc.
- Foreign exchange turnover by Educational Institutions like equity participation, donations etc.
- Export turnover relating to services of units operating under SEZ / EOU / EHTP / STPI / BTP Schemes or supplies of services made to such units;
- Clubbing of turnover of services rendered by SEZ / EOU /EHTP / STPI / BTP units with turnover of DTA Service Providers;
- Exports of Goods.
- 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.
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.
Utilization of Duty Credit Scrips
Duty credit scrips can be utilized/debited for payment of custom duties in case of Export Obligation (EO) defaults for authorization under chapters 4 and 5 of the Foreign Trade Policy.
Such utilization /usage shall be in respect of those goods which are permitted to be imported under the respective reward schemes.
Duty credit scrips can also be used for payment of composition fee under FTP, for payment of application fee under FTP, if any and for payment of value shortfall in EO under para 4.49 of HBP 2015-20.
Utilization of Duty Credit Scrips shall be permitted for payment of duty in case of import of capital goods under lease financing.
Filing of Claim for SEIS
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.
Duty Credit Scrip shall be valid for a period of 24 months from the date of issue and must be valid on the date on which actual debit of duty is made.
Last date of filing of application for Duty Credit Scrips
The last date for filing application shall be 12 months from the end of relevant financial year of claim period. Certain percentage of late cut shall be deducted if application is filed beyond 12 months from end of relevant period
SEIS Rates
General Rates for SEIS Rewards are 5% and 7% respectively for different notified services rendered during FY 2018-19. Readers may refer Appendix 3D to understand applicable rate for services. Appendix 3D is applicable for FY 2018-19 as well vide Public Notice No. 07/2015-20 dated 11th May, 2018
Moreover, rates for FY 2019-20 are not yet notified by government.
Recent Developments in terms of Covid- Outbreak
Government vide notification no. 57/2015-20, Dated 31st March, 2020 and Public Notice No. 67/2015-20 dated 31st March 2020 has made certain amendments in FTP 2015-20 and in Handbook on Procedures, amendments which are relevant has been mentioned below
- Foreign Trade Policy 2015-20 shall continue to be valid till 31st March, 2021
- The last date for filing SEIS application for FY 2018-19 shall be 31st December, 2020
- For Services rendered during FY 2019-20; Category of services and rates of rewards shall be notified separately in Appendix 3X
- For the services rendered during w.e.f. 1st April, 2020 decision on continuation of scheme will be taken subsequently and notified accordingly.
The Government of India vide Public Notice No. 08/2015-2020 dated 1st June 2020 provides following with regard to SEIS
- Duty Credit Scrips issued between March to June 2018 shall be valid till 30th September, 2020
- For Services rendered in FY 2016-17, the last date of application with 10% late cut would be 30th June 2020 and time barred after this date
- For Services rendered in FY 2017-18, the last date of application with 5% late cut was 31th March 2020 and same shall continue to be applicable till 30th June, 2020 and 10% late cut would be applicable for applications submitted till 31st March, 2021.
Appendix Summary
| Appendix 3A | Goods not allowed for debiting through Duty Credit Scrips |
| Appendix 3B | Goods and Notified Rates |
| Appendix 3C | Exports of goods through courier or foreign post office using e-commerce |
| Appendix 3D |
Services and Notified Rates |
| Appendix 3E | Deemed Foreign Exchange if payment in INR |
(Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided. Neither Author nor Yes GST (collectively referred as we) assume no responsibility thereof. The user of the information agrees that the information is not a professional advice and is subject to change without notice. In no event, we shall be liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.)
Mr. Setia is a CA by Profession and expert in the field of Indirect Taxation Based in Delhi. Rich experience of over 5 year.