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Govt caps entitlement under service export scheme during FY20 at Rs 5 crore.

Date: 24-09-2021
Subject: Govt caps entitlement under service export scheme during FY20 at Rs 5 crore
The government on Thursday imposed a limit on the total entitlement under the Services Export from India Scheme (SEIS) for shipments made during 2019-20, at Rs 5 crore per exporter. Under the scheme, depending on the nature of services, the government gives duty credit scrips or a reward at 3-5% of net foreign exchange earned and covers service providers located in India.

The Directorate General of Foreign Trade (DGFT) has notified a list of eligible services and rates under the SEIS for exports made during 2019-20 is being notified.

"A limit of total entitlement under SEIS has been imposed for service exports rendered in the period April 1, 2019, to March 31, 2020, and capped at Rs 5 crore IEC (import-export code)," the DGFT said in a notification.

However, the facility to claim benefits under SEIS on payments in Indian rupees would not be available for services rendered in FY20.

Under the 5% rate, the sectors include professional services (like legal, taxation, engineering, veterinary and urban planning), research and development; communication (radio and television, sound recording), construction, educational, environmental, and health. The 3% rate is applicable to advertising, investigation and security, packaging and printing.

“This will benefit the small and medium enterprises in the services sector. We welcome the inclusion of almost all services in the ambit of SEIS,” said Services Export Promotion Council of India (SEPC) Chairman Maneck Davar, adding that the move will support large sections of service exporters especially in travel and tourism, medical value tourism and education.

The deadline for submission of SEIS for 2019-20 will be December 31, 2021.

“While the industry was waiting for the SEIS notification, the capping of Rs 5 crore and removal of Management Consulting Services and Services to Exporters whose reciept was not in Foreign exchange has denied the export incentive to a large chunk of service exporters,” said Bipin Sapra, partner, EY.

Other export sops

In a separate notification, the DGFT said that an additional option is provided to exporters to avail extension in export obligation period till December 31 this year in case of specified advance authorisations and authorisations under the Export Promotion Capital Goods (EPCG) scheme without any composition fees.

This benefit is, however, subjected to a 5% additional export obligation on balance exports to be fulfilled.

EPCG is an export promotion scheme under which an exporter can import a certain amount of capital goods at zero duty for upgrading technology related to exports. On the other hand, advance authorisation is issued to allow duty-free import of inputs, which is physically incorporated in the export product.


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