How can SEIS scheme help exporters located in India?
Service Exports from India Scheme (SEIS), which was earlier known as Served from India Scheme (SFIS) is an opportunity for reducing the burden of indirect tax on the exporters tremendously.
The objective of the scheme is to encourage service exports from India to any other country. Any company located in India shall be treated as a service exporter rather than a service being exported by an Indian company.
Under the scheme, the reward is issued as duty credit scrips with which the goods and service tax debits would be eligible for CENVAT credit or drawback.
Duty credit scrip is the most important export promotion incentive provided by the government at present. They are issued to exporters and the scrip allows duty deduction (non-payment of taxes) of a specified amount in the scrip.
The major highlights of the policy are:
· All scrips under the scheme would be fully transferable.
· Scrips issued under Exports from India Schemes can be used for the following:-
(a) Customs duty for import of inputs / goods.
(b) Excise duty on domestic procurement of inputs or goods.
(c) Service tax on procurement of services.
· If the exporter does not import or buy goods, the duty scrip can be easily sold/transferred in the market (at discount), thereby ensuring the exporter a good source of miscellaneous income.
· Boost to exports of defence and hi-tech items.
· The Policy specifically prohibits scrip entitlement to service providers engaged in supply of service from India through commercial presence in any other country (Commercial presence) or supply of a service from India through the presence of natural persons in any other country (Presence of natural persons).
· The selected Services would be rewarded at the rates of 3 or 5 per cent.
Services eligible for this scheme and the rate of rewards can be broadly categorised into:
|Service||Admissible Rate (% of Net Foreign Exchange Earned)|
|Research and Development services||5%|
|Other services like Advertising services, Market research, Management consulting service, Technical testing and analysis services, Services incidental to agricultural, hunting and forestry, fishing, mining, manufacturing, energy distribution, Placement and supply services of personnel, Investigation and security, Maintenance and repair of equipment, Building- cleaning services, Photographic services, Packaging services, Printing, publishing and Convention services||3%|
|Construction And Related Engineering Services||5%|
|Health-Related And Social Services||5%|
|Tourism And Travel-Related Services||3 or 5%|
|Recreational, Cultural And Sporting Services||5%|
Eligibility for claiming SEIS Benefit
1) The benefit is linked to Net Foreign Exchange (NFE) Earnings.
2) The service provider should have a positive Net Foreign Exchange (NFE) earnings in excess of USD 15,000.
NFE=Foreign Exchange inflow for services provided-Foreign Exchange expenditure
From the above points, we can clearly see SEIS has attracted a new wave of exporters and is a huge relief to them as a tax incentive.
Maximum benefits can be ensured to exporters by applying for SEIS Duty Scrip. The steps to be followed for application are:
1) Service providers shall have an active Import Export Code (IEC) at the time of rendering such services for which rewards can be claimed.
2) Assessing the eligibility of various specified services
3) Assessing the eligibility of various foreign remittances
4) Calculation of Net foreign Exchange (NFE) Earnings for every eligible category of service provider
5) Preparation and filing of annual application. Last date for filing the annual application is 12 months from end of relevant year. E.g. for FY 2015-16, the last due date is 31st March, 2017. The application should be made in Form ANF3B using digital signatures.
6) Following up with authorities for issuance of scrips