Entitlement under SEIS for services exports in FY20 capped at Rs 5 crore

The Directorate General of Foreign Trade (DGFT) has imposed a cap on the total entitlement under the Services Exports from India Scheme (SEIS) at Rs 5 crore per exporter for shipments done in 2019-20 (FY20).

The move is expected to benefit small businesses in the services sector.

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

SEIS was rolled out six years ago, as part of the foreign trade policy 2015-2020, to promote export of services from India. Under the scheme, the government gives 3-5 per cent incentive on net foreign exchange earned in the form of duty-credit scrips. Scrips can be used for payment of basic and additional Customs duties on goods imported.

The facility to claim benefits under SEIS on payments in Indian currency will not be available for services rendered in FY20. The deadline for submission of SEIS for FY20 will be December 31.

“We are glad our efforts to impress upon the government the need to support large sections of services exporters with this incentive, especially travel and tourism, medical tourism, and education, has been successful. This will benefit small and medium-sized enterprises in the services sector. We welcome the inclusion of almost all services within the ambit of SEIS,” said Maneck Davar, chairman, Services Export Promotion Council.

Professional services, such as legal and taxation, engineering, veterinary, urban planning, research and development, radio and television, sound recording, among others, fall under the 5 per cent rate. Advertising, investigation and security, packaging, and printing fall under the 3 per cent rate.

DGFT also said that an additional option is provided to exporters to avail of extension in export obligation till December 31 in case of specified advance authorisations and export promotion capital goods authorisations without any composition fee. The benefit will be subject to a 5 per cent additional export obligation on balance exports to be fulfilled.