SEIS Refund from DGFT
Service Exports from India Scheme (SEIS): – The Government of India notifies the Foreign Trade Policy 2015-2020 w.e.f. 1st April 2015. This policy shall remain in force upto 31st March 2020. Pursuant to new foreign trade policy (FTP) 2015-20, Government of India has introduced the “Service Exports from India Scheme (SEIS)” replacing the earlier scheme ‘Served from India Scheme’ (SFIS). let’s get the knowledge about SEIS refund from DGFT.
Service Exports from India Scheme (SEIS) apply to ‘Service Providers located in India’ instead of ‘Indian Service Providers’. These services now cover every type constitution of business style i.e. proprietor, Partnership firm, LLP, a listed company, unlisted company, AOP, BOI, etc. The basic intention is to provide benefits to all service providers located in India, instead of Indian Service Providers.
Previously, the scheme was not available to foreign companies and was available only to the India entities, but in order to promote the exports from India w.r.t. services provided, the SEIS scheme was introduced by Government of India, which covers all types of entities who are operating from India either it is a foreign entity or any India entity.
The main categories of services under the said scheme (Illustrate only) are Professional Services, Research & Development Services, Audio Visual Services, construction and related to Engg. Services & Various other specified services such as Educational, Environment, Transport, Sporting, Health related services and Travel related services etc.
Service Exports from India Scheme (SEIS) Objectives :- Service Exports from India Scheme (SEIS) objective is to encourage export from India in respect of notified services. SEIS will automatically increase the exports from India.
Eligibility:- All service providers of notified services, who are providing services from India, regardless of the constitution or profile of the service provider are eligible for SEIS refund from DGFT.
For eligibility of SEIS, In preceding financial year service provider should have minimum net free foreign earning of USD 15,000. For Individual and sole proprietorship service provider the minimum net free foreign exchange earnings criteria would be USD10,000 instead of USD 15,000 in preceding financial year.
How to calculate Net Foreign Exchange : –
Net Foreign Exchange = Gross Earnings of Foreign Exchange minus Total remittances (Expense or payment) of Foreign Exchange relating to service sector in the Financial year.
Another important condition to claim reward under the SEIS is that service provider shall have to have an active IEC during time of rendering such services for which rewards are claimed.
Payment in Indian Rupees for service charges earned shall be treated as receipt in deemed foreign exchange as per RBI guidelines.
Nature of Rewards: – Under SEIS, the service providers of notified services are incentivized in the form of ‘Duty Credit Scrips’ at the rate of 3% or 5% or 7% on their net foreign exchange earnings. Net foreign exchange earnings means that any amount realized from sales of services minus the all the expenses incurred to earn such income.
Utilisation of Duty Credit Scrip:- The reward issued as duty credit scrip freely transferable and usable for all types of goods and service tax debits on procurement of services / goods. Debits would be eligible for drawback or CENVAT credit. In new Foreign Trade Policy, there is no actual user condition and no restricted to usage of Duty Credit Scrip for specified types of goods.
All duty credit scrips issued under SEIS and the goods imported against these duty credit scrips would be fully transferable.
Scrips issued under Exports from India Schemes can be used for the following payments of :-
1. Payment of Customs Duties for import of goods or inputs other than items listed in Appendix 3A.
2. Payment of Excise duties on domestic procurement of goods or inputs including capital goods as per DoR notification.
3. Payment of Service tax on procurement of services as per DoR notification
4. Payment of Customs Duties and fee as per paragraph 3.18 of this Policy.
Entitlement (Rate of Reward) :-
On changing business environment, the Government of India has also reviewed its foreign trade policy and makes most welcome changes in its policy in midterm review of Foreign Trade Policy (FTP) – 2015-20, and has decided to provide an additional incentive rate by 2% with effect from 1st November, 2017. Now all eligible service providers are entitled for ‘duty credit scrip’ ranging from 5% to 7% from 1st November 2017 of foreign exchange earned as under:
List of Services for SEIS Refund from DGFT
| 1. | Business Services | Incentive Rate (%) | ||
| S.No | Sectors | CPC | Upto Oct 2017 | From Nov 2017 |
| A. | Professional Services | |||
| a. | Legal services | 861 | 5 | 7 |
| b. | Accounting, auditing and book-keeping services | 862 | 5 | 7 |
| c. | Taxation services | 863 | 5 | 7 |
| d. | Architectural services | 8671 | 5 | 7 |
| e. | Engineering services | 8672 | 5 | 7 |
| f. | Integrated engineering services | 8673 | 5 | 7 |
| g. | Urban planning and landscape architectural services | 8674 | 5 | 7 |
| h. | Medical and dental services | 9312 | 5 | 7 |
| i. | Veterinary services | 932 | 5 | 7 |
| j. | Services provided by midwives, nurses, physiotherapists and
paramedical personnel |
93191 | 5 | 7 |
| B. | Research development services | |||
| a. | R&D services on natural sciences | 851 | 5 | 7 |
| b. | R&D services on social sciences and humanities | 852 | 5 | 7 |
| c. | Interdisciplinary R&D services | 853 | 5 | 7 |
| C. | Rental/Leasing services without operators | |||
| a. | Relating to ships | 83103 | 5 | 7 |
| b. | Relating to aircraft | 83104 | 5 | 7 |
| c. | Relating to other transport equipment | 83101, 83102,83105 | 5 | 7 |
| d. | Relating to other machinery and equipment | 83106-83109 | 5 | 7 |
| D. | Other business services | |||
| a. | Advertising services | 871 | 3 | 5 |
| b. | Market research and public opinion polling services | 864 | 3 | 5 |
| c. | Management consulting service | 865 | 3 | 5 |
| d. | Services related to management consulting | 866 | 3 | 5 |
| e. | Technical testing and analysis services | 8676 | 3 | 5 |
| f. | Services incidental to agricultural, hunting and Forestry | 881 | 3 | 5 |
| g. | Services incidental to fishing | 882 | 3 | 5 |
| h. | Services incidental to mining 5115 | 883 | 3 | 5 |
| i. | Services incidental to manufacturing 885 | 884 | 3 | 5 |
| j. | Services incidental to energy distribution | 887 | 3 | 5 |
| k. | Placement and supply services of personnel | 872 | 3 | 5 |
| l. | Investigation and security | 873 | 3 | 5 |
| m. | Related scientific and technical consulting services | 8675 | 3 | 5 |
| n. | Maintenance and repair of equipment (not 8861-8866 including maritime vessels, aircraft or other transport equipment) | 633 | 3 | 5 |
| o. | Building cleaning services | 874 | 3 | 5 |
| p. | Photographic services | 875 | 3 | 5 |
| q. | Packaging services | 876 | 3 | 5 |
| r. | Printing, publishing | 88442 | 3 | 5 |
| s. | Convention services | 87909 | 3 | 5 |
| 2. | Communication Services | |||
| A. | Audiovisual services | |||
| a. | Motion picture and video tape production and distribution service | 9611 | 5 | 7 |
| b. | Motion picture projection service | 9612 | 5 | 7 |
| c. | Radio and television services | 9613 | 5 | 7 |
| d. | Radio and television transmission services | 7524 | 5 | 7 |
| e. | Sound recording. | N.A. | 5 | 7 |
| 3 | Construction and related engineering services | |||
| A | General construction work for building | 512 | 5 | 7 |
| B | General construction work for civil engineering | 513 | 5 | 7 |
| C | Installation and assembly work | 514, 516 | 5 | 7 |
| D | Building completion and finishing work | 517 | 5 | 7 |
| 4 | Educational Services | |||
| A | Primary education services | 921 | 5 | 7 |
| B | Secondary education services | 922 | 5 | 7 |
| C | Higher education services | 923 | 5 | 7 |
| D | Adult education | 924 | 5 | 7 |
| 5 | Environmental Services | |||
| A | Sewage services | 9401 | 5 | 7 |
| B | Refuse disposal services | 9402 | 5 | 7 |
| C | Sanitation and similar services | 9403 | 5 | 7 |
| 6 | Health Related and Social Services | |||
| A | Hospital Services | 9311 | 5 | 7 |
| 7 | Tourism and Travel Related Services | |||
| A | Hotels and Restaurants (including catering) | |||
| a. | Hotel | 641-643 | 3 | 5 |
| b. | Restaurants (including catering) | 641-643 | 3 | 5 |
| B | Travel agencies and tour operators services | 7471 | 5 | 7 |
| C | Tourist guides services | 7472 | 5 | 7 |
| 8 | Recreational, Cultural and Sporting Services (other than audiovisual services) | |||
| A | Entertainment services (including theatre, live bands and circus services) | 9619 | 5 | 7 |
| B | News agency services | 962 | 5 | 7 |
| C | Libraries, archives, museums and other cultural services | 963 | 5 | 7 |
| D | Sporting and other recreational services | 964 | 5 | 7 |
| 9 | Transport Services | |||
| A | Maritime Transport Services | |||
| a. | Passenger transportation | 7211 | 5 | 7 |
| b. | Freight transportation | 7212 | 5 | 7 |
| c. | Rental of vessels with crew | 7213 | 5 | 7 |
| d. | Maintenance and repair of vessels | 8868 | 5 | 7 |
| e. | Pushing and towing services | 7214 | 5 | 7 |
| f. | Supporting services for maritime transport | 745 | 5 | 7 |
| B | Air transport services | |||
| a. | Rental of aircraft with crew | 734 | 5 | 7 |
| b. | Maintenance and repair of aircraft | 8868 | 5 | 7 |
| c. | Airport operations and ground handling | 8868 | 5 | 7 |
| C | Road Transport Services | |||
| a. | Passenger transportation | 7121, 7122 | 5 | 7 |
| b. | Freight transportation | 7123 | 5 | 7 |
| c. | Rental of commercial vehicles with operator | 7124 | 5 | 7 |
| d. | Maintenance and repair of road transport equipment | 6112, 8867 | 5 | 7 |
| e. | Supporting services for road transport services | 744 | 5 | 7 |
| D | Services auxiliary to all modes of transport | |||
| a. | Cargo handling services | 741 | 5 | 7 |
| b. | Storage and warehouse services | 742 | 5 | 7 |
| c. | Freight transport agency services | 748 | 5 | 7 |
Notes:
Under education services, SEIS shall not be available on Capitation fee.
Operations from India by Indian Flag Carriers only are allowed under Maritime transport services.
The list of services and the rates of rewards are being reviewed time to time by Government.
Procedure for applying SEIS:-
1. Fill Application Form Online at DGFT site, for grant of duty credit scrip for eligible services rendered for a financial year on annual basis in ANF 3B using digital signature
2. RA shall process the application received online after due scrutiny.
3. Documents such as Annexure to ANF 3B shall be uploaded by Chartered Accountants digitally.
Validity period for duty scrip:- SEIS Refund from DGFT (Duty Credit Scrip) shall be valid for a period of 18 months from the date of issue.
Income tax Changeability of SEIS refund :- The SEIS refund from DGFT is taxable under Income tax Act 1961; under section 28(iiib) of Income tax Act 1961.
The scrip’s value will be taxable in the period of its allotment i.e. the value of certificate allotted will be taxable only in the period of its allotment of such certificate. The said view is on the basis of Judgement by Hon’ble Supreme Court in “Excel Industries’ per our understandings, the entire amount received as credits will be taxable in the year of receipt; irrespective of the year to which it relates.
Also See, “LLP Advantage and Disadvantage in India
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