The Service Export from India Scheme (SEIS) is the Ministry of Commerce’s incentive through the Directorate General of Foreign Trade (DGFT) for the service exporters of India. This scheme is implemented with an aim to encourage service exports from India.
The scheme was earlier called Served from India Scheme (SFIS) for the financial year 2009-2014.
SEIS aims to maximize the export of notified/selected service exports from India. Under this scheme, the exporters of some specific services are entitled to a 3% / 5% / 7% incentive on Net Foreign Exchange that is earned through Duty Credit licenses. These SEIS licenses can further be utilized as a mode of payment of Import duty or can be encashed by selling it to the Importers.
What is a SEIS license or Duty Credit license?
Under the Service Export from India Scheme (SEIS), incentives are granted in the form of a Duty Credit license, also termed as SEIS license or SEIS License. SEIS license is a document adhering to which the entitled holder has to pay customs duties on the import of various goods and services.
These government-issued licenses are Freely Transferable,i.e., if the license holder doesn’t import, they can sell the SEIS License at a premium rate in the open market.
What are the uses of the SEIS licenses?
SEIS license allows the exporter to pay their tax liabilities. It can be used against tax liabilities coming out of basic customs duty, additional customs duty, safeguard duty, transitional specific safeguard duty, and anti-dumping duty. It is freely transferable, but can’t be utilized to set off GST, compensation cess, and education cess.
The SEIS license remains valid for 24 months from the date of issue. Although its benefits don’t need to cease after two years.
The exporter holding a SEIS license isn’t able to use it within the validity period, they can transfer it to any other person to be used for their own outstanding tax liability.
The SEIS license can also be revalidated by the DGFT if applied through a special request, under exigent circumstances.
The SEIS licenses are incentives in favor of the exporters that aim to promote exports by allowing the exporters to set off the basic customs duty against it. It must be kept in mind that the SEIS license isn’t applicable to set off the IGST/ CGST/ SGST liability.
How to use the SEIS License?
The SEIS license helps the exporter in limiting their cash outflow through tax liabilities and enables them to use cash for working capital for meeting their export demands. Depending upon the EXIM Policy regulations, an exporter receives a license of 2% to 5% of his export value.
To make things clear, consider a situation in which an exporter gets an export order and has to import raw materials for initiating the manufacturing process. It’s obvious that for executing production and despatching, the exporter will need funds. Thus, it clearly won’t be possible for the exporter to pay import duty on the purchase of raw materials along with the expenses of manufacturing, resulting in a significant fall in their working capital. Holding a Duty Credit license (DCS) reduces the expenses of the exporter. For instance, if the exporter holds a DCS balance of Rs. 1 lakh and Rs. 1.5 lakh is customs duty liability for importing raw materials, they will be required to pay for the difference only, i.e., Rs. 50,000. To be precise, the exporter can consume Rs. 1 lakh in SEIS license or the DCS for the outstanding customs duty liability.
Required document to apply under the SEIS Scheme
Here’s a list of important documents that will be required for applying to get the SEIS Licence Services:
Importer Exporter Code (IEC Code)
Application form ANF-3B (Aayat Niryat Form)
Statement showing the nexus between Invoices and FIRC’s (Table No 4)
Write up of Services
Self–Certified copy of invoice and FIRC’s
DGFT Digital Signature Certificate (DSC)
Why take assistance from the DGFT Gurus for claiming benefits of the SEIS Scheme?
The DGFT consultants are export experts with experience of more than thirty years in the field. We have ample knowledge and skills for its application to gain maximum benefits from the scheme for our clients.
Our SEIS Scheme Advisors extend their DGFT License Services to the clients from the initial stage of preparing the documents to provide hassle-free services. We also help in preparing and submitting applications online for the license under the SEIS Scheme.
The team takes regular follow-ups at the DGFT department to get the documents and approvals at the earliest.
Our DGFT Advisors also extend their expert services for the sale of licenses in the market for the best rate available, and documentation for transferring the license to the buyer.
The transfer is done online along with recording the details on the DGFT website.
We make sure the entire procedure is executed in a time-bound manner.
30+ Years of Experience, dedicated team of DGFT Experts
Most startups find it challenging to raise money. In such cases schemes like SEIS i.e Service Exports from India Scheme can help them get equity investment. At an early stage, it can be beneficial when a startup needs funds for its growth. Investors can claim the benefit of reliefs on capital gains tax and income tax.
If an investor loses money in their investment, they can claim additional reliefs.
You can enjoy these benefits to the fullest without much hassle for application, document submission, etc, by contacting us. We will assist to claim these benefits. We thrive to provide the best services to our clients.
You should meet the criteria mentioned below to apply for SEIS:
- The company must be trading for under two years
- The company must have less than 25 employees
- The company should not have more than £200,000 in gross assets
This scheme is for private individuals. The shares issued under this scheme should be ordinary ones and should not have any preferential rights.
A company must have a permanent UK establishment to apply for SEIS.
It should neither be controlled by other companies nor should it control any other company.
The company should be unlisted on the stock exchange. Startups and SMEs that attract investment through these schemes must spend the money on preparations for carrying out this activity, on qualifying business activity, or on development and research that will lead to it.
Broadly, a qualifying activity is:
- Where the company is carrying out trade in pursuit of profit, and
- Doesn’t involve any substantial amount of excluded activities.
These schemes prohibit certain activities in that companies cannot attract investment under SEIS.
These include trading in
- Insurance or money-lending
- Legal or accountancy services
- Property development
- Generating and exporting electricity.
Before applying for the scheme you should thoroughly check your business’s eligibility.
To attract an ample number of investors the first step would be to confirm your eligibility from HMRC also known as advance assurance.
You claim SEIS you need to fill up the online application and file it to the DGFT server. The other relevant field of information should be entered in the SEIS ECOM Module.
India’s share of world services trade more than quadrupled from 0.5% in 1995 to 3.5% in 2018 and India has become a major exporter of business services, notably in the Information, Communication, and Technology (ICT) sector. Medical and wellness tourism is also performing well, with patients seeking high-quality medical treatment at competitive prices in some Indian hospitals.