SEZ Eligibility under SEIS Scheme
SEIS is one of the export promotional scheme under FTP2015-20.SEIS are export promotional scheme to encourage service providers towards export contribution, thereby helping the country towards inflow of foreign exchange. Served from India Scheme (SFIS) was replaced by SEIS.SEIS scheme applicable to service provider located in India unlike SFIS scheme applicable to Indian service providers. This article will explore the eligibility of SEIS scheme in SEZ area.
To avail benefit under SEIS the service provider should have prescribed Net Foreign Exchange earnings as follows:
• Service providers should have minimum Net Foreign Exchange earnings of $15,000
• Individual service providers should have minimum Net Foreign Exchange earnings of $10,000
Service provider must have IEC code at time of rendering service to avail benefits namely:
• Service Providers are entitled duty paid scrip which can be used for payment of Excise duty ,Custom duty and Service tax
• Rate of reward varies from 3% to 5 % of on realized FOB value of exports in free foreign exchange
Ineligible Categories under SEIS
• Receipt of repayment of loan
• Foreign exchange earned from Contract and regular employment
• Issuance of foreign currency bonds
• Foreign currency loans
• Foreign equities to ADR and GDR
• Service provided by Telecom sector
SEIS are applicable to all service providers of specified Service located in India. However, only services provided in the manner / mode specified at Para 9.51 of FTP 2015-20 (i) & (ii) are eligible, viz.
• Supply of a ‘service’ from India to any other country (Mode 1-Cross border trade);
• Supply of a ‘service’ from India to service consumers of any other country (Mode 2-Consumption abroad)
SEZ Ineligibility Under SEIS Was Removed
Amendment notified vide Notification No. 08/2015-2020 dated 04.06.2015 through which export turnover relating to services of units operating under SEZ Scheme or supplies of services made to such units has been deleted from the list of ineligible categories under SEIS thereby making supply of a ‘service’ from SEZ to other countries eligible for SEIS benefits
Supply of service located in DTA to SEZ units reward under SEIS eligibility The DGFT Policy circular no 1/2015-20 dated 11-6-2015 has clarified the eligibility of reward under SEIS in case of supply of service from SEZ TO other country and DTA to SEZ ad depicted from the following diagram:
According to Article 1 of Constitution of India, territory of India shall comprise of the territory of states, union territories specified in First Schedule and include other territories acquired.
Whether SEZ is a part of India? In Kamyab Overseas Private Limited & Ans Vs. Union of India & Ors.on 6th July 2010 it followed Essar Steel Limited & Anr. Vs. Union of India & Ors Gujarat High Court case and held as under
“There is a difference between customs territory of India and territory of India. A Special Economic Zone is very much within India. Even though Special Economic Zone may be deemed to be outside the customs territory of India for purposes, specified in Section 53(1) of the SEZ Act, it is not to be deemed outside the customs territory for the purpose of levy of customs duty. Export means taking out of India to a place outside India and import means bringing into India from a place outside India. Bringing any goods from any part of India to a Special Economic Zone is not import or export for levy of customs duty.”
From the above case laws, it is clear that SEZ is part of India. Goods transferred from any part of India to SEZ Zone is not treated as export for the purpose of levy of duty under Section 12 of Customs Act
In Re Tulysyan [2014(313) E.L.T 977(G.O.I)], It was held that there is no two terms namely “export” and “export outside India” There is only one term export .Hence there should not be any differential treatment of “export” and “export outside India”.
SEIS scheme under FTP 2015-20 is one the best export promotional scheme .Widening of applicability namely to Service provider located in India under SEIS is remarkable move and much better that SFIS scheme as it applies only to Indian Service providers. SEIS has removed the SFIS scheme disadvantage of non applicability of the scheme to foreign brand service of Indian Companies.
By Notification No. 08/2015-2020 dated 04.06.2015Service from SEZ was removed from ineligible category under SEIS scheme. However vide circular no 1/2015-20 dated 11-6-2015, it has been clarified SEZ to other country eligible under SEIS and DTA to SEZ is ineligible.
From above discussion, it is clear that SEZ is part of India and it will be a territory outside India only for authorized transactions From the preamble of SEZ act ,it is clear that it has been created for export promotion. SEIS scheme is also for export promotion. From 2(m) of SEZ Act, it can be ascertained that export includes supply from DTA to SEZ. There is also overriding provision under section 51 of the Act that SEZ act will prevail over other laws. Therefore, if benefits under SEIS are extended even to supply of service from India to SEZ, by way of amendment it will help to boost our economy.