Services to qualify under foreign trade policy:
“Service” Includes all tradable services covered under General Agreement on Trade in services and earning free foreign exchange.
The general agreement on trade in service defines services in four modes of supply: Cross border Trade, Consumption aboard, commercial presence, and presence of natural persons.
Who is a “Service Provider” under foreign trade policy:
Mode 1: Cross border trade: Supply of service from India to any other country e.g. KPO/BPO/ITES services and consultancy etc.
Mode 2: Consumption abroad: Supply of a Service from India to the service consumer of any other country eg Education training, tourism, medical treatment, etc.
Mode 3: Commercial Presence: Supply of service from India through commercial presence in any other country e.g banking, hotel, etc.
Mode 4: Presence of natural persons: Supply of service from India through the presence of natural persons in any other country like the doctor, nurse, engineer, etc.
SEIS benefit is available for Mode 1 and Mode 2 only.
SEIS benefits are not available for Mode 3 and Mode 4 only.
Reward Rates
As per Appendix 3D of Foreign Trade Policy reward rates for various services are as follows:
| Sectors | Services | Rate |
| Professional Services | Legal Services, Taxation, Architectural, Engineering, Medical and dental | 7% |
| Research and Development Service | R & D- Natural Science, 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 consultancy services · Technical testing and analysis services · Services incidental to agricultural, hunting and forestry, fishing, mining, manufacturing, and energy distribution · Placement and supply service of personal · Investigation & security · Related scientific and technical consulting · Maintenance and repair of equipment(Not including maritime vessels, aircraft or other transport equipment) · Services of Building cleaning, photographic, packaging, Printing, Publishing, Conventional and Hospital |
5% |
| Tourism and Travel related services | Hotel and restaurants,
Travel agencies, Tour operators, and Tour Guides |
5%
7% |
| Recreational, cultural & supporting services | Entertainment Service, News Agency Service, Libraries Service, Archives, Museum, Cultural activities, Sporting and other activities | 7%
|
| Transport Service | Maritime transportation, Air and Road Transportation includes auxiliaries services to all modes of transport like Warehousing, Cargo, etc. | 7%
|
| Construction and Engineering related service | General construction work for the building, civil construction, installation, and assembly work, and building completion and finishing work | 7% |
| Educational Service | Primary, Secondary, Higher and adult education service | 7%
|
| Environmental Service | Sewage, refuse disposal, and sanitation service | 7% |
| Health-related and social service | Hospital Services | 7% |
What are the eligibility criteria for claiming rewards under SEIS?
- Services rendered should fall under the definition of services of foreign trade policy
- The service provider should have minimum Net free foreign exchange earnings of US $ 15000. ($10000 is also allowed for individual)
- The service provider must have an active IEC code.
How to calculate Foreign exchange earnings (FEE)
Net foreign exchange earnings= Gross earnings of foreign exchange-Total expenses/Payment/Remittance of foreign exchange by the IEC holder relating to the service sector in the financial year.
What is the effective date of the scheme?
The reward under MEIS/SEIS shall be admissible for exports made/services rendered on or after the date of notification of the policy.
What is the last date of filing an application for duty scrips?
For SEIS the last date for filing an application shall be 12 months from the end of the relevant financial year of the claim period!
However, If you are late then DGFT will give you the incentives with a late filing cut as given below:
| Sr. No. | Particulars | Late cut rate | Incentive |
| 1 | Application received after the expiry of the last date but within six months from the last date (0 to 6 months) | 2 % | 98 % |
| 2 | Application received after six months from 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 two years (8th Month to 24th Month | 10 % | 90 % |
Example:
For F.Y 2018-19, the due date for filing an application for a reward under the SEIS scheme is upto 31st March 2020.
- If a claim is filed after 31st March 2020 but before 30th September 2020 He is eligible for 98% of the total rewards.
- If a claim is filed between 1st October 2020 to 31st March 2021 He is eligible for 95 % of the total rewards.
- If a claim filed between 1st April 2021 to 31st March 2022 He is eligible for 90 % of the total rewards.
SEIS claim cannot be filed beyond 31st March 2022 for F.Y 2018-19. In a nutshell, a person can file a claim within 3 years of the end of the financial year.
Where SEIS scrips can be used for?
- Custom duty
- Excise dusty
- Service tax
- Exchange duties etc.
Scrips can not be used for payment of IGST and Compensation cess in case of Import.
What is the validity of scrips?
These scrips can be used or valid for a term of 24 months from the date of its issuance.
Is this scrip are transferable?
Duty Credit scrips are freely Transferable/Saleable/Tradeable.
Who are not eligible to claim rewards under SEIS?
- Other than those who have supplied services under Mode 1, Mode 2, and Appendix 3D (as mentioned above).
- Equity participation
- Debt participation
- Receipts of repayment of loans
- Donations
- Any other inflow of foreign exchange other than from services notified.
- Receipts of units operating under EOU/EHTP/STPI/BTP
- Related to financial service sector such as issuance of foreign currency bonds
- Earned through contract or regular employment abroad
- Export of goods
- Payment of services received from EEFC account
- Foreign exchange earnings from services of Airlines
- Service providers in telecom sectors.
For queries, you can write us at startup@rmpsco.com or rajnikant@rmpsco.com
Published on: May 10, 2021