Service Exports from India

"Service Exports from India" refers to the trade of services provided by Indian companies to clients or consumers in other countries. These services encompass a wide range of sectors including IT, software development, business process outsourcing (BPO), engineering services, healthcare, education, tourism, and more. India has emerged as a global hub for outsourcing due to its skilled workforce, cost-effectiveness, and technological expertise. Service exports play a significant role in India's economy, contributing to employment generation, foreign exchange earnings, and overall economic growth. The sector continues to evolve, driven by innovation, digitalization, and globalization, further enhancing India's position in the global services market. Easypaytax supports businesses in navigating this thriving sector.

The Government of India has introduced the Service Exports from India Scheme (SEIS) under the Foreign Trade Policy (FTP) - 2015-20, effectively replacing the earlier scheme 'Served from India Scheme’ from Foreign Trade Policy, 2009-15. The primary objective of the scheme is to enhance the global price competitiveness of Indian services. Under SEIS, providers of notified services are incentivized with Duty Credit Scrips at a rate of 3% or 5% on their net foreign exchange earnings. These SEIS services are fully transferable and can also be utilized for the payment of various Central duties/taxes, including basic customs duty. Rewards under SEIS are admissible for the export of services rendered on or after April 1, 2015, which is the notification date of the Foreign Trade Policy 2015-20. Easypaytax assists businesses in leveraging these benefits.

Eligibility Criteria

To effectively avail SEIS benefits:

A service provider must have minimum net free foreign exchange earnings of US$15,000 in the year the services are rendered.
For Individual Service Providers and sole proprietorships, this minimum net free foreign exchange earnings criterion is reduced to US$10,000 in the financial year when the services have been rendered.
The service provider must possess an active Import Export Code (IEC) at the time of rendering such services for which rewards are being claimed. Once these eligibility conditions are met, the service provider can claim SEIS benefits in the form of Duty Credit Scrips, but only for services specifically listed in Appendix 3D (Attachment Given at the bottom of page along with rate of rewards).
Payments in Indian Rupees for service charges earned on specified services will be treated as receipt in deemed foreign exchange as per Reserve Bank of India guidelines. The list of such services is indicated in Appendix 3E.
- Net Foreign Exchange earnings for the scheme are defined as:
- Net Foreign Exchange = Gross Earnings of Foreign Exchange minus Total expenses / payments / remittances of Foreign Exchange by the IEC holder, specifically relating to the service sector in that Financial Year.
If the IEC holder is both a manufacturer of goods and a service provider, then only the foreign exchange earnings and total expenses / payments / remittances relevant to the service sector will be considered.
To claim rewards under the scheme, the service provider must maintain an active IEC at the time of rendering the services for which rewards are claimed. Easypaytax ensures comprehensive eligibility checks.

SEIS Benefit

A company aiming to secure SEIS investment must have no more than 25 employees, while those seeking EIS investment must have no more than 250 employees. To qualify for SEIS funding, a company must have been trading for less than 2 years.

Services Eligible to Claim Benefits under the SEIS:

The Service Exports from India Scheme (SEIS) offers a reward calculated based on the ‘net’ free foreign exchange realized, with the percentage of this reward specified in Appendix 3D of the Foreign Trade Policy 2015–20.

The various services eligible to claim benefits under the SEIS are enumerated below:

Communication Services
Business Services
Construction and related engineering services
Educational Services
Environmental Services
Health-related and social services
Tourism and travel-related services
Recreational, cultural and sporting services
Transport services

Easypaytax assists eligible businesses in maximizing their SEIS benefits.

Apply for SEIS Benefits

An Online Application needs to be diligently filed on the DGFT Server, requiring the accurate entry of relevant information into the SEIS ECOM Module. All the pertinent forms, including ANF3B and its Annexure, are readily available online. Easypaytax simplifies this application process.

Registration with Service Export Promotion Council

Whether you are a manufacturer or a services provider, RCMC (Registration Cum Membership Certificate) from the relevant export promotion council is compulsory for your main line of business. As per Public Notice No. 26/2015-2020 dated 01.08.2018 issued by the Directorate General of Foreign Trade, Department of Commerce, an “Others” category has been added to the list of 14 service sectors of SEPC. Now, all services are covered by SEPC alongside the 14 service sectors explicitly mentioned earlier. Therefore, if you are a services provider and wish to avail yourself of SEIS incentives, SEPC RCMC is compulsory. Easypaytax assists in obtaining RCMC.

Duty Credit Scrip

Service providers of eligible services shall be entitled to duty credit scripts at notified rates on their net foreign exchange earned. Duty credit scripts can be effectively used for the payment of custom duties, excise duties, GST on procurement of services, custom duty in case of default in fulfillment of export obligation under Advance Authorization/EPCG, etc. Furthermore, the SEIS scheme has provided relaxation from the actual user condition, and duty credit scripts and goods imported using duty credit scripts are freely transferable. A duty credit script would be valid for a period of 18 months from the date of issue.

Foreign Exchange or Remittance Ineligible under SEIS Scheme

Foreign exchange remittances other than those explicitly earned for rendering of notified services would not be counted for entitlement. Thus, other sources of foreign exchange earnings such as equity or debt participation, donations, receipts of repayment of loans etc., and any other inflow of foreign exchange unrelated to the rendering of service, would be deemed ineligible. Easypaytax provides clarity on eligible remittances. The information on the Service Exports from India Scheme (SEIS) is detailed above. Comment below your thoughts on the Service Exports from India Scheme (SEIS).

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Service Exports from India