For Service exporters who trade services from India to any other nation, the benefits come in the form of rewards like duty credit scrips, which form the basis of the Scheme known as Service Exports from India Scheme (SEIS Scheme).

[If you want an in-depth knowledge of SEIS Scheme read our article on “All about Service Exports From India Scheme – SEIS”]

SEIS Scheme thus, form the incentive process of DGFT. The rewards are not given in the form of Cheque/Direct Bank Tranfer but in the form of duty credit scrips. It is issued by DGFT and can be used to pay Custom duties and taxes. Also SEIS benefits are not available to all services exported from India. DGFT has defined the List of eligible services under SEIS and corresponding SEIS Rates for claiming the Incentive. For example, the IT sector is one of the main service exporters but it isn’t eligible under the SEIS Scheme.

Rate of Rewards under SEIS Scheme is a percentge of the Net Foreign Exchange Earned. 

The Foreign Trade Policy 2015-2020 clearly defines the Net Foreign Exchange Earnings, which is:

Net Foreign Exchange Earnings = Gross Foreign Exchange Earnings – Total Foreign Exchange Payments/ Remittances/ Expenses bore by the service provider in the financial year.

As already discussed SEIS reward comes in the form of a Duty credit scrip. What’s interesting in these duty scrips is that they are transferable in nature and can be sold from one assessee to the other. After transferring your duty credit scrip, you can get 97% – 99% of the scrip value in terms of money. The SEIS Rates of incentives differ from service to service.

Now a question must arise in your mind that which services are eligible for SEIS benefits & how much monetary benefit you will be getting via the SEIS Scheme.

Let us help you find that.

List of Eligible services under SEIS & The SEIS Rates of Reward – (Table)

Let us show you the full list of eligible services and their rate of rewards. It may be noted that the Rates are divided into two periods i.e. 01.04.2015 to 30.10.2017 & 01.11.2017 to 31.03.2018. This is because, in the Mid-term Review of the Foreign Trade Policy, the Government had enhanced the Rate of Incentive under SEIS Scheme for selected services. It was increased from 5% to 7% & from 3% to 5%.

Also, It may be noted that the rate of Incentive for period 01.11.2017 to 31.03.2018, is continued till 31.03.2019. However, there is no official Government notification till date. Rate of incentives after 31.03.2019 are not notified yet.

Case study

Suppose you are an XYZ company and exports services from India to abroad. First you need to analyse thoroughly that the service you are exporting is eligible for SEIS benefit or not. Now suppose your firm provides accounting and auditing services and is having net foreign exchange earnings of $40,000 which is INR 28,00,000 (40,000*70). So according to the above table accounting and auditing service comes under CPC code 862. So, you are eligible to get a reward at a rate of 7% which is INR 1,96,000.(Approx Figures)

Now you got INR 1,96,000 in the form of duty credit scrip. You can use this duty credit scrip in 2 ways

1. You can use the duty credit scrip for paying your import duties if any.
2. You can transfer this duty credit scrip to any Importer and encash that. You will get 97% – 98% of the duty credit scrip value in the form of money.

Just take a look into the present scenario regarding issuance and valuation of duty credit scrips

SEIS Incentive Eligibility Criteria

• According to the Service Exports from India Scheme, a Company, an LLP or a Partnership Firm providing any kind of service having a minimum of $15,000 net free foreign exchange earnings in the year of rendering services are eligible for SEIS Incentives according to its SEIS Rates defined by DGFT.
• Similarly, Individual Service Providers and Sole Proprietorship having a minimum $10,000 net free foreign exchange earnings in the year of rendering services are also eligible to earn the rewards under the SEIS.

[If you want to know the complete process of applying under SEIS Scheme read our article on “SEIS Scheme Application Process – Complete Guide (2019)”]

Why us?

Afleo.com is a leading Import Export consulting firm in India. We offer services like Services Export from India Scheme (SEIS), Merchandise Export From India Scheme (MEIS),  EPCG License – Issuance and Redemption, DFIA – Issuance and Transferability, Advance License – Issuance and Redemptions, SION fixation/revision & obtaining a license from DGFT. We are a leading SEIS Scheme Consultant having a client base across India.

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