24 September 2021
Government notifies SEIS for FY 2019-20; prunes list of eligible services and reduces rates

The much-awaited extension and the details on the Service Exports from India Scheme (SEIS) for FY 2019-20 have finally been announced by the government vide Notification No. 29/2015-2020 dated 23 September 2021. The amendments in the scheme are summarized below:
  1. Pruning of eligible services list
    The following services have been removed from the list of notified services eligible for SEIS incentive for FY 2019-20:
Description of Service Central Product Classification (CPC) Code
Cargo handling service 741
Support services for maritime transport 745
Management consulting services 865
Support services for maritime transport 866
Technical testing and analysis services 8676
 
  1. Reduction in incentive rates
    The incentive rates of SEIS for FY 2019-20 have been revised and notified in the range of 3% to 5% of net foreign exchange earned. Accordingly, the incentives now would be reduced (by approximately 2%) as compared to the earlier years’ rates.

     
  2. Other important updates
  • In addition to reduced rates, total entitlement under SEIS has been capped at INR 50 million per IEC for service exports rendered in FY 2019-20.
  • The facility to claim benefits under SEIS on payments received in INR would not be available for services notified in Appendix 3E for the period FY 2019-20.
  • The deadline for submission of SEIS application for FY 2019-20 is 31 December 2021. Post this, the application will become time-barred i.e., there is no provision for delayed application with late-cut.
Our Comments

The notification has provided much-needed clarity on the applicability of SEIS for FY 2019-20. The exclusion of specified services such as management consulting and technical testing and analysis service from SEIS is a big let down for service exporters that seems to be a direct result of the government’s budgetary restrictions due to COVID-19. The capping of amount of total incentive is also bound to affect large service exporters. With the online functionality yet to be operationalized and the strict deadline of 31 December 2021, the exporters should gear up to collate all the underlying documentation for filing their claims. Once the functionality is available on the portal, they should apply at the earliest to avoid any last-minute issues, which may result in lapse of the entire benefit.
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