How to earn Extra 5% from Export of Services outside India

How to earn Extra 5% from Export of Services outside India By CA Paras Mehra Introduction India is a country which offers various incentives on exports outside India. We often read in newspapers about the various schemes of the government, but all went into vain as we dont know the practical aspects of earning these incentives. Out of many incentives on exports, we will talk about the Service Export from India Scheme (SEIS). This is one of the schemes which were very uncommon and people know very less about it. Let us understand the practical aspect of this scheme and how you can use it for your benefit. Background Exports from India schemes are incentivized from the government to cover the infrastructural inefficiencies and other cost that the exporters face while exporting from India. There are two types of schemes available to the exporter:

1. Merchandise Export from India Scheme (MEIS)
2. Services Export from India Scheme (SEIS)

MEIS is for the exporter who are dealing in goods and SEIS are for services providers. You can also read the full export procedure from incorporation to shipment. Click here. What is Service Export from India Scheme (SEIS) Service Export from India scheme introduced by the government to promote the export of notified services from India. On export of notified services, certain percentage of value of services is rewarded to the exporter. The range of this reward is from 2 to 5%. You can further learn about this from the following video: How reward is granted to exporter The reward is granted in the form of freely transferable duty credit schemes. These strips are freely transferable to any person against cash. Further, you may also use this strip to pay the following taxes:

1. Excise duty payment
2. Custom duty payment on import of goods
3. Service tax payment

Hence, this reward is as beneficial as cash reward. Conditions to avail the benefit

1. Notified Services: Not all the services are eligible under this scheme. Government of India notifies the services which are eligible to claim benefits under this scheme.

Any service other than notified services is not eligible to claim the benefit. Click here to check the notified services.

2. Minimum Net Free Income: The exporter of services should earn atleast Net free foreign exchange earnings of US $ 15,000 in preceding financial years to be eligible for duty credit scrip.

For individuals and sole proprietorship, the minimum earning is US $10,000. The Net foreign Exchange = Gross Earnings of Foreign Exchange minus Total expenses / Payment / remittances of Foreign Exchange by the IEC holder, relating to service sector in the Financial year. How to apply to the scheme An application for grant of duty scrip for notified services should be filed online on DGFT website on annual basis in ANF 3B. The process is completely online which can be filed using digital signatures. After submission of online application, the RA shall approve the application after due verification. How to use the duty credit scrip The duty credit scrip can be used once it is registered with the port of export. Once the scrip is registered, it can be used on any port for payment of custom duties. In case you have no taxes to pay, then you can freely sell your scrip to any other person of course against some cash. Validity period of Duty Credit Scheme This scrip is valid till 18 months from the date of issue of the scrip. Revalidation of scrip is not permitted. Further, the last date of filing application shall be 12 months from end of relevant financial year of claim period. Conclusion: Why Scheme is not fully utilized Lack of awareness about the schemes makes them uncommon and people are not able to fully utilize the benefits of the schemes. Hence, we have started the awareness program through our marketing channel to help the various exporters throughout the country. About the Author CA Paras Mehra is the co founder of hubco.in, dealing mainly in import and export. He has been a consultant to various corporate and startups. For any query or feedback, you can email to him at [email protected].