Export Incentive Schemes
What is SCIPS
Exim/Duty Credit scrips are scrips given to exporters as “incentives” by the Government of India. While Merchandise Exports from India Scheme (MEIS) scrips are given for goods exports, Service Exports from India Scheme (SEIS) scrips are given for services exports. The value of the scrips are a percentage of the Free On Board (FOB) value of goods/services exported and are freely transferable. The scrips can be used to offset customs duty while importing. Recently, the government has removed the GST chargeable on sale of these scrips. The GST chargeable on sale of Exim/Duty Credit scrips is now ZERO!
Service providers of eligible services shall be entitled to duty credit scrip at notified rates on the net foreign exchange earned. Duty credit scrips can be used for the payment of custom duties, excise duties, GST on procurement of services, custom duty in case of default in fulfilment of export obligation under Advance Authorization/EPCG, etc., Further, the SEIS scheme has given relaxation to the actual user condition and duty credit scrips and goods imported using duty credit scrips are freely transferable. Duty credit scrip would be valid for a period of 18 months from the date of issue.
Their Objective & History
the Objective to this Incentive scheme is to reward the Exporter to offset the Exporters Infrastructure inefficiencies and other costs that the exporters face while exporting from India,
this Whole is stated Under Chapter 3 of Foreign Trade Policy (FTP) there are Schemes which provide benefits to exporters of certain goods or services.
Service Exports from India Scheme is one of the two schemes under Foreign Trade Policy that were launched as a part of the Export from India Scheme. The prime motto of this scheme is to encourage export of notified services from India.
Two schemes have been introduced under the Indian Foreign Trade Policy 2015-20 (FTP 2015-20) as a part of Exports from India Scheme. These schemes are namely:
- Service Exports from India Scheme (SEIS)
- Merchandise Exports from India Scheme (MEIS)
Encouraging the export of notified services from India is the main objective of the Service Exports from India Scheme (SEIS). The details of the Service Exports from India Scheme (SEIS) are discussed below
Merchandise Exports from India Scheme (MEIS)
Merchandise Exports from India Scheme is popularly known as MEIS. MEIS is a duty scrip given as a reward by the government to an exporter of goods. The value of the scrips is 2% to 5% of the FOB value of goods exported. There are more than 5000 tariff lines which are eligible for MEIS. The scrips can be used to offset import duties and are freely transferable. (Note: The DGFT notifies the goods eligible for MEIS from time to time)
Service Exports from India Scheme (SEIS)
Services Exports from India Scheme is popularly known as SEIS. SEIS scheme was introduced on 1st April 2015 under the Foreign Trade Policy of India 2015-2020.SEIS aims to promote export of services from India by providing duty scrip credit for eligible exports The SEIS is a duty scrip given as a reward by the government to an exporter of services. The value of the scrips is 3% to 5% of the value of services exported. The scrips can be used to offset import duties and are freely transferable. Starting FTP 2-15-2020, service providers located in India are also eligible for benefits under the scheme. Service Exports from India Scheme was earlier termed as Served from India Scheme (SFIS). (Note: The DGFT notifies the services eligible for SEIS from time to time)
SEIS Scheme Eligibility
- Services Eligible: Only Services rendered in Mode I: Cross Border Trade i.e. Supply of a service from India to any other country and Mode II: Consumption abroad i.e. Supply of a service from India to service consumers of any other country.
- Services not Eligible: Supply of a Service through Mode 3: Commercial Presence i.e. Supply of a service from India through Commercial Presence in any other Country and Mode 4: Presence of Natural persons in any other country – not eligible for reward under this scheme.
- To be eligible under this Scheme, the service provider shall have minimum net free foreign exchange earnings of $15,000 in the preceding financial year.
- For Individual Service Providers and Sole Proprietorships, such minimum net free foreign exchange earnings criteria is $10,000 in the preceding financial year.
- To claim the incentives, the service provider is required to have an active IEC Codeat the time of rendering such services.
- In case the IEC holder is manufacturer of goods as well as service provider, then the foreign exchange earnings and Total Expenses/ payment/ remittances to be taken into account for service provider only
- Also, in order to claim reward under the SEIS scheme, the service provider shall have to have an active Import Export Code (IE Code) at the time of rendering such services for which rewards are claimed.
Net foreign exchange earnings for the SEIS scheme is calculated as:
Net Foreign Exchange = Gross Earnings of Foreign Exchange – Total Expenses or payment or remittances of Foreign Exchange.
|Gross Earnings of Foreign Exchange
|Less: Total Expenses/Payments
|Less: IEC holder’s Remittances of Foreign Exchange, with respect to the service sector in that particular financial year
|Net Foreign Exchange
- If the IEC holder is a manufacturer of goods as well as service provider, then the foreign exchange earnings and Total expenses / payment / remittances shall be taken into account for service sector only.
- In order to claim reward under the scheme, Service provider shall have to have an active IEC at the time of rendering such services for which rewards are claimed.
What is the validity of MEIS or SEIS scrips?
MEIS and SEIS scrips are valid for a period of 18 months from the date of issuance of the scrips. The limited validity of scrips means delays in realizing its value could mean loss of complete value of the license. [No half measures here!]
My MEIS/SEIS scrips have expired. Is there a scope for revalidation?
Revalidation of scrips is not permitted unless validity has expired while in custody of Customs Authority /RA. Revalidation of scrips is not permitted unless covered under paragraph 2.20(c) of the Handbook of Procedures (HBP) of the Foreign Trade Policy 2015-2020.
“2.20 Revalidation of Import / Export License Certificate/ Authorization / Permissions for Non-SCOMET items
(a) RA concerned may revalidate import authorization on merits for six months from date of expiry of validity.
(b) Export authorization may be revalidated by RA concerned only on approval of DGFT for six months at a time and maximum up to 12 months from date of expiry of validity.
(c) However, revalidation of freely transferable authorization / duty credit scrip’s and stock and sale authorization shall not be permitted unless validity has expired while in custody of Customs Authority / RA.”
Is GST chargeable on sale of MEIS/SEIS?
GST charged on the sale of MEIS/SEIS is ZERO percent
Important check points and documentation before and after filing of application under SEIS scheme
- To hold an active IEC Code. It should be remembered that rectify and/ or amend any changes in IEC code before making an application for SEIS scripts. Any application filed with the DGFT is IEC based.
- To check Export of eligible services as notified in Appendix 3D read with para 3.08 of chapter 3 Foreign Trade Policy 2015-2020.
- To obtain registration cum membership certificate (RCMC) from the appropriate authority like for legal services, registration and annual renewal is required from Service Export Promotion Council (SEPC) as mentioned in public notice no. 26/2015-2020, dated 1st August 2018. Before making an application before SEPC, please obtain country wise and currency wise export turnover certificate for last three years.
- Obtain class-III digital signature of organization.
- Keep all the export invoices along with Foreign Inward Remittance Certificate (FIRC) sequentially and it should reconcile with the eligible services as mentioned in Annexure-3D. Please ensure that remitting bank is correctly mentioning RBI code on the FIRC.
- Keep details of all the foreign expenses incurred during the year.
- Calculate net foreign exchange earned during the year and compute amount of SEIS scripts eligible % of net foreign exchange. No late cut will be deducted if application will be filed within one year from the end of financial year.
- Online file ANF-3B annually on dgft.gov.in on services under SEIS (apply for SEIS scheme). Please insert digital signature.
- All pages of the enclosures to ANF-3B need to be attested by the Chartered Accountant (CA)/ Cost and Works Accountant (ICWA)/ Company Secretary (CS).
- Along with filing the ANF-3B, the applicant shall upload the following documents online:-
- Documentary evidence in the form a CA/CWA/CS certificate, which certifies that payment in INR for services rendered as under Appendix 3E have been scrutinized and these payment in INR are approved under RBI guidelines as deemed to be received in foreign exchange and deemed to be earned in foreign exchange – is required to be submitted by applicants which claims benefit for INR payments.
- In case description of the services as per the invoices is different from the description of services in the appendix 3D/3E, then the copies of the sample invoices for each of the different services shall be uploaded by the applicant.
- After uploading of all documents a fee of INR 1,000 shall be paid and then final ANF 3B form will be downloaded from the website.
- There is no need to submit any hard copies in DGFT.
- An applicant is required to visit regularly on the website http://dgftcom.nic.in/eComapplications.htmland in case any deficiency letter is issued by regional DGFT, then it should be properly replied and submitted in hard copy within one month from the date of issue of notice.
- All correspondence with DGFT should be on the letter head of the applicant and not on the letter head of authorized person like CA or CS.
- An applicant is required to carefully select port of registration at the time of filing of online application. It is preferable to select EDI port like INTKD6 instead of Non EDI Port like INDEL5, FPO. Since, scripts issued on EDI port can be easily sold in the market, whereas there are very few buyers to purchase scripts issued on the non-EDI port.
Whether remittances through Credit Card and other instruments for SEIS is allowed (Refer Para 3.11 of Chapter 3 of Foreign Trade Policy (FTP) :-
The value of exports will be calculated after the consideration of the Free Foreign Exchange which is earned using international credit cards and the like, as per the permission granted by the Reserve Bank of India (RBI).
Are there services that are ineligible for SEIS?
Yes, some services including those rendered by financial institutions for raising loans are ineligible.
Foreign exchange remittances other than those earned for rendering of notified services would not be counted for entitlement.
The following exchange remittances would not be considered as a part of the Net Foreign exchange earned for the purpose of claiming incentives OR Ineligible under this scheme:-
- Foreign exchange remittances other than those earned for rendering of notified services would not be counted for entitlement.
- Other sources of foreign exchange such as equity or debt participation, donations, receipts or repayment of loans etc and any other inflow of foreign exchange, unrelated to rendering of service.
What are the services that get higher rate of SEIS?
Some services that get higher (5%) rate of SEIS are professional Services, R&D, communication services, construction services, engineering services, and health and education services.
Is there a time limit for to apply for MEIS or SEIS scrip’s?
There is a time limit.
- Applications have to be made within 3 months from the date of uploading EDI shipping bills on the DGFT server, or
- 3 months from the date of print/release of shipping bills (for non-EDI bills) or
- twelve months from the Let Export (LEO) date, whichever is later,
In respect of shipments for which claim is being filed.
For SEIS, the last date for filing application shall be 12 months from the end of relevant financial year of claim period.
Special Provisions: The special provisions under the Service Exports from India Scheme (SEIS) can be summed up as follows:
- The government has the right to specify the export markets, services, or products, which will not qualify for the addition of Duty Credit Scrip entitlement.
- In Appendix 3A, goods will be specified by the government which are not permitted for debiting via Duty Credit Scrips in the case of import.
- Under this chapter, the government has the right to restrict or change the ceiling applicable on Duty Credit Scrip.
- The government shall set the value cap for products, else, restrict the total reward to one IEC holder at any given point in time, under this chapter.
- Transitional ArrangementWith respect to the goods sent out or benefits provided till this Policy notification date, that were generally qualified for scrips issuance under past Chapter 3 of the prior Foreign Trade Policy(ies) and scrip is connected/offered on or post notice of this Policy against such fare of merchandise or administrations provided, the then winning arrangement and technique with respect to qualification, privilege, transferability, utilization of scrip and some other factor in drive at the season of fare of merchandise or providing administrations, should be relevant to scrips like this.
- CENVAT/ DrawbackExtra Excise Duty, Customs Duty, or Services Tax payment in cash/via Duty Credit Scrip might be balanced as Duty Drawback or CENVAT Credit according to DoR standards or notice. Essential Customs duty payment in cash/via Duty Credit Scrip might be balanced for Duty Drawback according to DoR norms or notices.
- Import under lease financingWith respect to capital goods import in FTP – paragraph 2.34, under lease financing in terms of provision, use of Duty Credit Scrip will be allowed for duty payment.
- Export performance transfer
- Export performance transfer between IEC holders is not permitted. Thus, if a shipping bill contains the name of an applicant, the performance of export or yield of the applicant will be realised in the bank account of the applicant and the e-BRC/FIRC will be considered as an evidence.
- However, in case of MEIS, the supporting manufacturer or the company/firm responsible for realising the foreign exchange directly from overseas can claim the reward. In case the supporting manufacturer claims the reward, it has to be done along with a disclaimer from the firm or company which has realised the foreign exchange from abroad directly.
Splitting of Scrips:
These scrips can be split if requested subject to a minimum of Rs. 5 Lakh each and multiples thereof may also be issued, at the time of application. After issuance the split certificates would be permitted with the same port of registration as appearing on the original scrips in respect of EDI enabled ports. The facility of splits not allowed after issue of scrip in case of export through non-EDI Ports.
Some of the annexures attached to ANF -3B, ANF – 3C, ANF – 3D are required to be signed by a Chartered Accountant/ Company Secretary/ Cost Accountant.
What is declaration of intent under MEIS scheme?
To claim MEIS, export shipments would need the following declaration on the Shipping Bills in order to be eligible for claiming rewards under MEIS; (Reward column of the shipping bill should check (‘YES’). This is called the declaration of intent.)
My shipping bills are filed under (‘No’) reward scheme, can I claim MEIS?
If you have filed under (‘No’) reward scheme you cannot claim MEIS.
Is it mandatory to get EXIM SCRIPS registered at customs?
Yes, it is mandatory to get EXIM scrip’s registered at customs. Your CHA should be able to help you register your EXIM scrip’s at customs. In case of scrip applied under Service Exports from India Scheme, the applicant can choose any port as port of registration and mention it in the application at the appropriate column.
How can I avail SEIS?
- Applying for SEIS is simple and can be done online on DGFT’s website. An application for grant of duty credit scrip for eligible services rendered can be filed online for a financial year on annual basis in ANF 3B using digital signature.
- The last date for filing an application for claiming incentives for Service Exporters under this Scheme is 12 months from the end of relevant financial year.
- The applicant shall have the option to choose Jurisdictional Regional Officer on the basis of the Corporate Office/ Registered Office/ Head Office/ Branch Office address endorsed on IEC for submitting application/ applications.
- This option for the determination of the officer shall be exercised at the beginning of the financial year.
- Once this option is exercised, no change would be allowed for claims relating to that year.
How can I utlilise MEIS or SEIS?
MEIS and SEIS scrip’s are freely transferable and are usable for payment of Customs Duty (BCD), Anti-Dumping Duty (ADDs) and Safeguard Duties. The duty credit scrip’s cannot be used for payment of IGST and GST compensation cess in imports, and CGST, SGST, IGST and GST compensation cess for domestic procurement.
Risk Management System for checking Authenticity
A Risk Management system is in operation whereby every month the Computer System in DGFT office, on random basis, selects 10% of cases for each RA where scrips have already been issued, under each RA Scheme. RA in turn may call for original documents in all such selected cases for further examination in detail.
In case any discrepancy and/or over claim is found on such examination, the applicant shall be under obligation to rectify such discrepancy and/or refund over claim in cash with interest. The original holder of scrip, however, may refund such over claim by surrendering the same scrip whether partially issued or fully unutilised, without interest.
The Regional Authority (RA) might ask for the original proof of the annexures connected to the ANFs, landing certificates, etc. which were uploaded during a time period of 3 years from the date of issuance of the scrip.
In case the applicant fails to submit the documents, he/she would be obligated to refund the reward and the interest granted on it. The rate of interest will be as per the rate mentioned in Section 28AA of the Customs Act 1962 and will be charged from the scrip issuance date. The applicants should be responsible for maintaining all the relevant documents for a minimum time period of 3 years from the scrip issuance date.
Status Holder under Service Exports from India Scheme (SEIS):
- The leaders of the business industry who have made excellent contributions in global trade and made provisions for the betterment of the country’s foreign trade are called status holders. Status holders are not only responsible for contributing towards the export trade but are also expected to offer guidance and pave the way for the improvement of new entrepreneurs.
- The status holder tag is available for all the exporters who are engaged in export of technology, services, and goods and have a valid import-export code (IEC). The status recognition is dependent on the performance of export. As mentioned in paragraph 3.21 of the Foreign Trade Policy, an applicant will be eligible for the status holder tag on successfully achieving the performance of export in the present and past 2 financial years. The export performance is calculated based on the FOB value of the free foreign exchange export earnings.
- The FOR value of exports (calculated in Indian currency) has to be converted to US Dollars, in case of deemed export. This conversion has to be made using the rate of exchange specified by the CBEC on 1st April of that particular Financial Year.
- The export performance for at least 2 out of 3 years is absolutely necessary for granting status to an applicant.
Status Category under Service Exports from India Scheme (SEIS):
- Export Performance
- One Star Export House 3 FOB / FOR (as converted) Value (in US $ million)
- Two Star Export House 25 FOB / FOR (as converted) Value (in US $ million)
- Three Star Export House 100 FOB / FOR (as converted) Value (in US $ million)
- Four Star Export House 500 FOB / FOR (as converted) Value (in US $ million)
- Five Star Export House 2000 FOB / FOR (as converted) Value (in US $ million)
Status Holders’ Privileges
A status holder will be qualified for certain privileges. These privileges can be summed up as follows:
- A Status Holder can grant authorisation and customs clearance for exports as well as imports on the basis of self-declaration.
- The Norms Committee can fix the Input Output regulations, in under 60 days on top priority.
- Unless it is specified otherwise in the FTP or HBP, Status Holders don’t have to furnish Bank Guarantee for those schemes which are specified under FTP.
- Status Holders will be exempted from documents’ negotiation that is to be made via banks. However, the remittances or receipts shall be obtained via banking networks.
- As per the guidelines of the Department of the Revenue, export houses having 2 stars or more will be allowed to set-up export warehouses.
- According to the guidelines of the CBEC, export houses having 3 stars or more will be eligible to avail the benefits of the Accredited Clients Programme (ACP).
- To be eligible for favourable treatment under certain agreements like Comprehensive Economic Partnership Cooperation Agreements (CEPA, Comprehensive Economic Cooperation Agreements (CECA), Free Trade Agreements (FTAs), and Preferential Trading Agreements (PTAs), the manufacturers who also have the Status Holder status (3 star/4 star/5 star) shall be allowed self-certification of their manufactured goods (according to their LOI/IL/IEM).
- As per para 2.108 (d) of the Handbook of Procedures, the manufacturer exporters who possess the Status Holder status will qualify for self-certification of their manufactured goods based in India.
- The concerned agencies will provide preferential treatment and priority in handling the consignments of an individual who has the Status Holder status.
- For the purpose of export promotion, status holders will be allowed to export freely exportable items for free of charge to an extent of Rs.2 crore or 2% of average annual export realisation in the previous 3 licensing years. However, it will not be applicable for gems, jewellery, articles made of gold, and precious metals.
- The annual limit will be up to 8% of the average annual export realisation during the previous 3 licensing years, in case of supplies of vaccines, life-saving drugs, and pharmaceutical products are sent to health programmes of international agencies like UN, WHO-PAHO, and government health programmes.
- The annual limit for export of pharmaceutical products by pharmaceutical companies will be 2% of the average annual export realisation during the previous 3 licensing years.
What is the MEIS/SEIS rate on my product/ service?
The DGFT notifies the goods eligible for MEIS from time to time
How can I avail MEIS?
Applying for MEIS is a simple procedure and can be done online on DGFT’s website with the concerned RA concerned in Aayat Niryat Form (ANF) 3A using digital signature. The relevant shipping bills and e-BRC shall be linked with the online application.
Am I allowed to sell MEIS or SEIS Exim scrip’s?
Yes. Scrip’s are freely transferable as per Para 3.02 of FTP.
“3.02 Nature of Rewards Duty Credit Scrips shall be granted as rewards under MEIS and SEIS.
The Duty Credit Scrips and goods imported / domestically procured against them shall be freely transferable. The Duty Credit Scrips can be used for :
(i) Payment of Basic Customs Duty and Additional Customs Duty specified under sections 3 (1), 3 (3) and 3 (5) of the Customs Tariff Act, 1975 for import of inputs or goods, including capital goods, as per DoR Notification, except items listed in Appendix 3A.
(ii) Payment of Central excise duties on domestic procurement of inputs or goods,
(iv) Payment of Basic Customs Duty and Additional Customs Duty specified under Sections 3 (1), 3 (3) and 3 (5) of the Customs Tariff Act, 1975 and fee as per paragraph 3.18 of this Policy.”
At what rate can I sell my MEIS/SEIS Exim scrip’s?
The rates of MEIS/SEIS Exim scrip’s keep fluctuating.).
What are the products that get higher rate of MEIS?
MEIS rates vary from 2% to 5% on eligible products. To check MEIS rate of your product click here.
Are there products that are ineligible for MEIS?
Yes. As per Para 3.06 of FTP, the following exports categories /sectors are ineligible for Duty Credit Scrip entitlement under MEIS
- EOUs / EHTPs / BTPs/ STPs who are availing direct tax benefits / exemption
- Supplies made from DTA units to SEZ units
- Export of imported goods covered under paragraph 2.46 of FTP
- Exports through trans-shipment, meaning thereby exports that are originating in third country but trans- shipped through India
- Deemed Exports
- SEZ/EOU/EHTP/BPT/FTWZ products exported through DTA units
- Items, which are restricted or prohibited for export under Schedule-2 of Export Policy in ITC (HS) unless specifically notified in Appendix 3B.
- Service Export.
- Red sanders and beach sand
- Export products which are subject to Minimum export price or export duty
- Diamond Gold, Silver, Platinum, other precious metal in any form including plain and studded jewellery and other precious and semi-precious stones
- Ores and concentrates of all types and in all formations
- Cereals of all types
- Sugar of all types and all forms
- Crude / petroleum oil and crude / primary and base products of all types and all formulations
- Export of milk and milk products
- Export of Meat and Meat Products
- Products wherein precious metal/diamond are used or Articles which are studded with precious stones
- Exports made by units in FTWZ
Can I sell unregistered EXIM scrip?
Yes. However unregistered scrip’s attract lesser rate, due to additional process burden on the buyer.
Why should I buy EXIM scrip’s?
Exim scrip’s are typically sold at a discount. Say the face value of a scrip is Rs.100 and it is being sold at a price of say Rs.90. You can now utilise it at customs while importing goods at a 100% face value of Rs.100 and save Rs.10. [Note: Prices quoted above are for illustration purpose only. Actual prices offered for the scrip’s are dynamic and are based on technical and market factors.]
How much will I save if I use Exim scrips?
Exim scrips are typically sold at a discount. Say the face value of a scrip is Rs.100 and it is being sold at a price of Rs.95, you save Rs.5 if you use that scrip during payment of duty during imports. If you buy an EXIM scrip of a face value of Rs.5,00,000 at Rs.4,50,000, and you want to import goods which have a customs duty on them of say Rs.5,00,000, you will be able to pay the entire Rs.5,00,000 of the customs duty through your EXIM scrips. So in this case you save Rs.50,000 by buying EXIM scrips. [Note: Prices quoted above are for illustration purpose only. Actual prices offered for the scrips are dynamic and are based on technical and market factors.]
Can I return, unutilised/balance value in an EXIM scrip?
No, you cannot return unutilized/balance value. However you can use the balance value to offset customs duty on other imports, or you can sell the unutilised portion of an EXIM scrip.