Export promotion is a strategy for the economic development of a country wherein the domestically produced goods and services are injected into the international market. Now, to promote these exports, the Government provides various benefits to the Indian traders. The exporters who trade their services across the entire country, the benefits come in the form of rewards like duty credit scrips, which form the basis of the Service Exports from India Scheme (SEIS).
Similarly, the exporters of goods receive benefits in the form of incentives under the Merchandise Exports from India Scheme (MEIS). Both the SEIS Scheme and MEIS Scheme thus, form the incentive process of DGFT.
The Government of India provides all these incentives to the exporters in order to give a proper direction, guidance, and encouragement to the service sectors. But why? Well, the service sector forms an integral part of the Nation’s economy & its development is crucial for the growth of the nation.
The Service Exports from India Scheme (SEIS) was launched in the year 2015 which is valid for a period of 5 years until 2020 as per the Foreign Trade Policy of India 2015-2020. Previously the SEIS scheme was named as Served From India Scheme (SFIS). Under this Scheme, the service exporters residing in India are eligible to claim the benefits.
Under the Service Exports from India Scheme, the Government gives Incentives to Service Exporters from India. Only selected services are eligible under the SEIS Scheme india as per Appendix 3D. One those service which is eligible is “Environmental Services”.
Although, Appendix 3D only provides the Broad description of Services which are Eligible (For Example Appendix 3D only states that “Environmental Services” are eligible). But how does you can understand which exact services are included in Environmental Services? In order to understand & confirm that the service which you are offering is eligible under SEIS or not, one requires to look at the detailed description of SEIS Services.
Appendix 3D also includes a column of Provisional CPC Code against each service type.
Introduction to CPC Classification
The Central Product Classification (CPC) is a detailed product classification consisting of all goods and services. Enforced by the United Nations Statistical Commission, CPC was introduced to be an international standard, clearly defining and explaining all the goods and services classified under it and assigning to each of them a CPC Code for correct recognition. This classification was necessary to give the claimants a clear idea under which category their product falls and what percentage of benefit they are entitled to.
In a general way, CPC Classification offers a description of Services harmonized by various codes which are centrally acceptable in many Nations. Therefore, this CPC Classification plays the crucial role in deciding whether the service offered by you will be eligible under SEIS or not.
Now let’s decode and discuss about these codes and understand its importance. The main Heading of “Environmental Services” is further divided into sub-categories with CPC codes shown below.
|Environmental Services||CPC Code|
|Refuse disposal services||9402|
|Sanitation and similar services||9403|
The above tabulated codes basically mean that if the Service that you are offering matches with the Code description then you are eligible to apply for SEIS Scheme.
Let us consider Company M/S XYZ. Company is into the export of Environmental services and they have applied for SEIS. Thus, the company has received a DUTY credit scrip for Rs. 1 Lakh (Say for Example). Now this Company is also into Goods import. Thus they can set-off this Credit of Rs. 1 Lakh against the Basic Customs Duty which is payable to them at Customs during Import of Goods.
In the above Example, Company XYZ is into the Import of Goods. But what will happen to the scrip if the Company is not Importing anything? How will the Import Duty Credit be utilized? How will the scrip be beneficial to the Company?
It is here where we look at the core concept of the Freely Transferable Nature Of Rewards under SEIS.
It means that the Duty Credit Scrip is Freely Transferable or Saleable in nature. Therefore it can be sold to any individual who is into Imports of Goods or Services. This freely transferable nature of Scrips is also endorsed on the Duty Credit Scrip itself.
PFB below the Cropped Image of Above Duty Credit Scrip. It shows that the Scrip is Transferable in nature and it does not come with any actual user Condition.
This feature is unique to only SEIS because it was not present in the earlier SFIS (Served from India Scheme.
Therefore to sum it up, Consider an organization Exporting Environmental Services worth Rs. 1 crore in a particular FY and gets rewarded duty scrip of value Rs. 5 lakh (let’s assume Rate of Reward @5%). Now, either the holder can use it to import Goods/Services without paying duties up to Rs 5 lakh or sell it out in the market (in case he doesn’t import goods or utilize it) and get money in exchange of duty scrip.
Therefore, it can be said that rewards under SEIS Scheme are as good as cash incentive and all the service providers should take the SEIS Scheme benefits.