Service Exports from India Scheme was launched in 2015 as a part of the new Foreign Trade Policy 2015-2020 and is directed at the promotion of services exports from India. All the service providers who are based in India and fall under the list of SEIS eligible services will be given rewards as per the provisions of the scheme. In this article, you will be going through in details about SEIS eligibility criteria.

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

SEIS Eligibility Criteria

• It must be noted that not every Service Exporter from India is eligible for SEIS. Eligibility is primarily based on the type of Service given. To know the Entire List of Services Eligible under The SEIS Scheme, Please find the Table here.
• In order to claim the rewards, the service provider should have an active IEC Code at the time of giving the services.

Example: Company XYZ has taken its Importer Exporter Code (IEC Code) on 01.04.2016, then all the Remittances received by the Company after 01.04.2016 will be eligible for Claiming rewards under SEIS.

• The service provider needs to have a minimum of $15,000 as net free foreign exchange earnings in the Year of rendering Services. In simple words in the Year for which the Claim is being filed.
• In the case of sole proprietorships and other individual service providers, the above criteria is a minimum of $10,000 as net free foreign exchange earnings made in the year of rendering services.
• Service Providers of notified services, located in India, shall be rewarded under SEIS. Only Services rendered in the manner as per Para 9.51(i) and Para 9.51(ii) of the policy shall be eligible.

Let us explain to you in detail what the above line means:

Basically, there are 4 Modes through which services can be exported out of India. Policy for SEIS states that Only services given as per Mode 1 & Mode 2 will be eligible for rewards. That means Services given as per Mode 3 and Mode 4 will not be eligible under SEIS i.e Mode 3 and Mode 4 doesn’t fulfill the SEIS eligibility criteria. 

Let us analyze Mode 1 and Mode 2 with the help of Examples here. We will discuss Mode 3 & Mode 4 in the “Ineligible Category Section” below.

Para 9.51 (i) It is also symbolized as Mode 1 which says that if you are supplying services from India to any other country then you are eligible for SEIS benefits i.e you fulfill the SEIS eligibility criteria to claim the benefits.

Let us see a couple of examples:

Consider you are a Travel and Tourism Service Provider so the Mode 1 format will be as follows:

You have a website through which you provide customized itinerary services to your consumers which are situated in other countries.

Consider you are into Consultancy services Export Business. Then example of Mode 1 trade would be – You are providing business analysis services and sending that analysis to your respective client via mail.

This is also known as cross border trade.

Para 9.51 (ii) It is also symbolized as Mode 2 which denotes that if you are supplying services to foreign customers but are present in India, then you are eligible for SEIS benefits.

Let us see a couple of examples

Let us again take an example of Travel and Tourism Related Service Provider

Your organization is providing guides to all the foreign nationals coming to India for their respective purposes.

Let us get into more depth by taking an example of Consultancy Services

One of your clients is visiting or has visited India and has sought services from your consulting firm.

This is also known as Consumption Abroad.

[Best Example of Consumption Abroad (Mode 2) will be Indian Hotels where Foreign Nationals stay as Guests]

• SEIS rewards are also eligible for SEZ Units.
• The payments for specified services which are received in Indian Rupees but considered as deemed foreign Exchange are also eligible under the SEIS Scheme. A list of such services is given in Appendix 3E.
• Free Foreign Exchange earned through international credit cards and other instruments, as permitted by RBI shall also be taken into account for computation of the value of exports.

Ineligible categories under SEIS

As stated above, services are given in the manner as per Para 9.51 (iii) and Para 9.51 (iv) are not eligible under the SEIS Scheme.

Para 9.51 (iii), also called as Mode 3, signifies that if you are providing services to foreign nationals by having a commercial establishment in their respective country then you are not eligible for SEIS benefits i.e you don’t fulfill the SEIS eligibility criteria to claim the benefits.

Let us see with examples:

If you are Travel and Tourism Related Service provider and you have set up an office in Australia to cater to the needs and demands of your Australian clients then you won’t be able to gain any benefits from this type of trade.

Similarly if one of the consulting firms has set up an office abroad then they won’t be able to gain any SEIS related benefits from the trades they make in this type of setup.

This is also known as Commercial Presence.

Para 9.51 (iv), also known as Mode 4, put forward this point that if you are providing services to any other foreign national by going into their country then you are not eligible for SEIS benefits because you don’t fulfill the SEIS eligibility criteria. 

Let us take an example of Travel and Tourism Related Service

Supposedly you have sent one of your guides to a foreign country then this type of trade will not be counted in SEIS.

Congruently

If one of your consultants from your firm travels to the UK to provide services then this type of trade will also be ineligible for SEIS benefits.

This is also known as the Presence of Natural Persons in any other Country.

Therefore to understand it in a better way, Please find below the simplified table showing Mode-wise Eligible & Ineligible Categories.

Other Ineligible Categories under SEIS

All the remittances of foreign exchange apart from those which were earned for giving services which are notified will not be considered. This precisely means that all other sources of foreign exchange earnings like equity or debt participation, donations, loan repayment receipts, etc. which is not related to the service provided will not be considered.

Units which operate under EOU/EHTP/STPI and BTP Schemes are not eligible for SEIS Scheme Benefits.

It should be noted that the entitlement calculation under SEIS will not involve the following services

Remittances of Foreign Exchange received for:

 i) Under the Financial Services Sector

• Raising loans of all types in foreign currency
• Realization of Export proceeds of clients
• Use of ADRs/GDRs/other instruments for issuance of Foreign Equity
• Foreign Currency Bonds Issuance
• Selling Securities and Foreign Currency Bonds
• Selling Securities and other Financial Instruments
• Other types of receivables which are completely different from the services which are rendered by the financial institutions.

ii) Under Regular/ Contractual employment in a foreign country

• Payments which are received from the EEFC Account for various services
• Equity participation, donations, etc. or any other kind of foreign exchange turnover by the Healthcare Institutions.
• Equity participation, donations, etc. or any other kind of foreign exchange turnover by the Educational Institutions.
• Turnover of various DTA Service Providers which gets clubbed with the turnover of services rendered by EOU/EHTP/STPI or BTP units.
• All the foreign exchange earnings by Airlines or even Shipping whose neither origin nor source country is India.
• Telecom Sector service providers.

[To know in-depth detail about the documents required for the SEIS Application and how you can obtain them Read our article “Documents Required for SEIS Scheme Application – Updated List (2019“]

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