Central KYC Registry
Tag: CA
Incentives Schemes under the FTP
CA Harikrishna Puranik
Recently the GoI has extended various cut off dates for claiming incentives such as SEIS/MEIS. This may be your chance to encash such benefit, adding to your arsenal in fighting the CoVid Crisis.
Govt Of India, in order to facilitate and encourage the industry towards achieving positive Current Account Deficit, and level the playing field for Indian Exporters to compete in the global Market, announces various schemes for exporters of good and services.
Major Schemes are:
1 Duty Exemption Schemes (such as AA and DFIA)
2 Duty Remission Schemes (Currently Duty Drawback scheme)
3 Incentive schemes such as MEIS/SEIS.
Though there are lot many articles about incentive schemes, they mainly concentrate at conventional schemes such as Drawbacks (DBK) and Advance Authorisation (AA). In the current article, we will try to explain in simple terms, the concept and procedure of benefitting from SEIS Schemes.
Background:
Central government notified a scheme called Service Exports from India Scheme (“SEIS”) under Foreign Trade Policy 2015-20 (“FTP”). This scheme replaced its predecessor ‘Served From India Scheme (“SFIS”) under which the benefit was not available for foreign brand of the Indian companies. Exporters of the notified services will be awarded an incentive ranging from 3-7% of your Net Foreign Exchange Earning. These incentives are in the form of Duty Credit Scrips, which can be used for payment of import duties such as BCD. Don’t throw down the hat yet, saying we don’t have any imports, to use these duty scrips. The scrips are transferable and are usually purchased in the market at a marginal discount. So you can still pocket the remaining cash.
Pre-requisites:
1. The Services fall under the broad classification as;
- Cross border trade of eligible services from one country’s to the other country.
- Consumption of eligible services abroad.
- Services rendered in the commercial presence of one country in the territory of another is not eligible.
- Presence of natural person of one country providing their service in the territory of another is also not eligible.
2. Types of Services Notified in Schedule under Appendix 3D;
| Sl. No. | Name of the Service | Percent of incentive |
| Professional services | ||
| a. | Legal Services | 7 |
| b. | Accounting, auditing and book-keeping services | 7 |
| c. | Taxation services | 7 |
| d. | Architectural services | 7 |
| e. | Engineering services | 7 |
| f. | Integrated engineering services | 7 |
| g | Urban planning and landscape architectural services | 7 |
| h | Medical and dental services | 7 |
| I. | Veterinary services | 7 |
| j | Services provided by midwives, nurses, physiotherapists, and paramedical personnel | 7 |
| Research development services | ||
| a. | R&D services on natural sciences | 7 |
| b. | R&D services on social sciences and humanities | 7 |
| c. | Interdisciplinary R&D services | 7 |
| Rental/Leasing services without operators | ||
| a. | Relating to ships | 7 |
| b. | Relating to aircraft | 7 |
| C | Relating to other transport equipment | 7 |
| d. | Relating to other machinery and equipment | 7 |
| Other business services | ||
| a. | Advertising services | 5 |
| b. | Market research and public opinion polling services | 5 |
| c. | Management consulting service | 5 |
| d. | Services related to management consulting | 5 |
| e. | Technical testing and analysis services | 5 |
| f. | Services incidental to agricultural, hunting and Forestry | 5 |
| g. | Services incidental to fishing | 5 |
| h. | Services incidental | 5 |
| I. | Services incidental to manufacturing | 5 |
| J. | Services incidental to energy distribution | 5 |
| k. | Placement and supply services of personnel | 5 |
| l | Investigation and security | 5 |
| m. | Related scientific and technical consulting Services | 5 |
| n | Maintenance and repair of equipment (not 8861-8866 including maritime vessels, aircraft or other transport equipment) | 5 |
| o. | Building cleaning services | 5 |
| P | Photographic services | 5 |
| q | Packaging services | 5 |
| r. | Printing, publishing | 5 |
| s. | Convention services | 5 |
| Audio-visual services | ||
| a. | Motion picture and video tape production and distribution service | 7 |
| b. | Motion picture projection service | 7 |
| c. | Radio and television services | 7 |
| d. | Radio and television transmission services | 7 |
| e | Sound recording. | 7 |
| General construction work for building | 7 | |
| General construction work for civil engineering | 7 | |
| Installation and assembly work | 7 | |
| Building completion and finishing work | 7 | |
| Primary education services | 7 | |
| Secondary education services | 7 | |
| Higher education services | 7 | |
| Adult education | 7 | |
| Sewage services | 7 | |
| Refuse disposal services | 7 | |
| Sanitation and similar services | 7 | |
| Hospital services | 7 | |
| 7 | TOURISM AND TRAVEL-RELATED SERVICES | |
| A. Hotels and Restaurants (including catering) | ||
| a. | Hotel | 5 |
| b. | Restaurants (including catering) | 5 |
| B. Travel agencies and tour operators services | 7 | |
| C. Tourist guides services | 7 | |
| 8 | RECREATIONAL, CULTURAL AND SPORTING SERVICES (other than audio-visual services) | |
| A | Entertainment services (including theatre, live bands and circus services) | 7 |
| B | News agency services | 7 |
| C | Libraries, archives, museums, and other cultural services | 7 |
| D | Sporting and other recreational services | 7 |
| 9 | TRANSPORT SERVICES | |
| A | Maritime Transport Services | |
| a. Passenger transportation | 7 | |
| b. Freight transportation | 7 | |
| c. Rental of vessels with crew | 7 | |
| d. Maintenance and repair of vessels | 7 | |
| e. Pushing and towing services | 7 | |
| f. Supporting services for maritime transport | 7 | |
| B | B. Air transport services | |
| a. Rental of aircraft with crew | 7 | |
| b. Maintenance and repair of aircraft c. Airport operations and ground handling | 7 | |
| C | C. Road Transport Services | |
| a. Passenger transportation | ||
| b. Freight transportation | 7 | |
| c. Rental of commercial vehicles with operator | 7 | |
| d. Maintenance and repair of road transport equipment | 7 | |
| e. Supporting services for road transport services | 7 | |
| D | D. Services auxiliary to all modes of transport | |
| a. Cargo handling services | 7 | |
| b. Storage and warehouse services | 7 | |
| c. Freight transport agency services | 7 |
3. Exclusions:
i) Foreign exchange remittances other than those earned for rendering of notified services would not be counted for entitlement. Thus, other sources of foreign exchange earnings such as equity or debt participation, donations, receipts of repayment of loans etc. and any other inflow of foreign exchange, unrelated to rendering of service, would be ineligible.
ii) Following Foreign Exchange remittances shall not be considered for calculation of entitlement under this scheme:
I) Related to Financial Services Sector include
a) Raising of all types of foreign currency Loans,
b) Export proceeds realization of clients,
c) Issuance of Foreign Equity through ADRs/GDRs or other similar instruments,
d) Issuance of foreign currency Bonds,
e) Sale of securities and other financial instruments,
f) Other receivables not connected with services rendered by financial institutions
II) Earned through contract/regular employment abroad (e.g. labour remittances) would include
a) Payments for services received from EEFC Account,
b) Foreign exchange turnover by Healthcare Institutions like equity participation, donations etc.,
c) Foreign exchange turnover by Educational Institutions like equity participation, donations etc.,
d) Export turnover relating to services of units operating under EOU / EHTP / STPI / BTP Schemes or supplies of services made to such units,
e) Clubbing of turnover of services rendered by SEZ / EOU /EHTP / STPI / BTP units with turnover of DTA Service Providers
f) Exports of Goods
g) Foreign Exchange earnings for services provided by Airlines, Shipping lines service providers plying from any foreign country X to any foreign country Y routes not touching India at all
h) Service providers in Telecom Sector
4. Other Conditions
- Service provider must be located in India.
- Net Free Foreign Exchange Earning during the year must be higher than $15000($10000 in case of Sole Proprietorship)
- Must have a Valid IEC number.
- Incase of entities engaged in both manufacturing as well as service then the net foreign exchange earned by such entity shall be considered for services only (although you can claim MEIS on the goods exported)
- Earnings in INR is also considered as equalling FC where exports are made in INR.
- Earning via credit card is also eligible.
- You must posses a DSC registered with DGFT since the application should be submitted online.
Tips to Clear CA Exams
Arjuna: Hey (Hari)Krishna, the very thought of CA Exams itself gives me grief and I feel dejected, therefore, I will not Apply for the Exams!!.”
Krishna: Hey Partha, CA is also just a course. You too can clear it with ease.
Arjuna: Keshava…Hey Keshava! Wherever I look (on the Internet), I see nothing but good for nothing advices to clear the CA Exams. You being the almighty, show me the path to clear my exams with flying colours?
Krishna: Hey Savyasachi, here you go;
- Don’t Prepare Just for the Exam:
It may be a paradox, but never prepare for exams for the sake of exams. Clearing exams is actually the easy part. Once you are a CA, your Employer/Client, peers, society at large has high expectations on you. If you ask me, that is where the real exam starts! If you prepare only for the sake of exams, you will have a rude awakening once you start your practice or join employment. Learn the subjects keeping in mind the application of those subjects in the real world.
- Don’t Study it like a Theory Subject:
I still remember locking horns with my friend arguing how Company Law is not a theory subject. There are no theory subjects in CA. May be except for ISCA(no disputes there). Always prepare for all the subjects as they are practical subjects. Solve questions and case laws to understand the sections better, than learning the sections. Its good to go thru the bare act once before you start the preparation, but don’t get struck there itself.
- Imagine as if you are a CA already:
Maybe I am teaching a lot of Law of Attraction these days. But this really helps. When you are studying, imagine as if you are already a CA, and you are trying to help your clients manage their Compliances, update their Books as per Accounting Standards, or helping them make strategic decisions such as “Make or Buy”. This not only makes learning those subjects interesting for you, but helps you retain the core matter of the subject even after you qualify.
- How can I use this practically?
In continuation to the above point, whenever you learn a new Section/Standard etc, try to find atleast one situation where you can apply the same. This may be in your Articleship, or in other subjects. This builds the reasoning skills and make you a better CA once you start your Career.
- Stop Mugging the Book:
I have seen my friends who could remember every sentence in the Revision Test Papers and yet could not clear the exams. That is why CA is different. Like any other disciplines, how you apply the knowledge is more important than acquiring the said knowledge. Again, as I mentioned above, always learn with an intention to apply that in your career.
- Remembering Sections are not so important:
Agreed that, by remembering the sections of the law you may impress the examiner, but I do not see any practical use for the same. Instead, concentrate more on arrangement of sections and what they project as a whole. It will be easier to retain what you learn this way.
- Learn the intent:
Try to learn the intent behind the subject, especially in Tax and Law. If there is any restriction, like in Sec 2(22)(e) of Income Tax Act, or the different rates under section 194 for individuals and others, try to understand the intent of the law maker behind that section. This makes you understand the concepts better and keep yourselves updated with the amendments as well.
- Articleship is Very Important:
One of the key distinguishers in CA as compared to any other professional courses is the mandatory internship known as “Articleship”. Learning while you are working is, according to me, the best kind of learning. You get to experience all the things what you need to learn right in your office itself. Off late the trend of “Dummy Articleship” is on a rise. Most think that they can use the time available to better study and prepare for exams rather than working your Articleship. But this will not only make you void of the practical exposure required for clearing CA but make you less prepared for your post qualifying career as well
- Coaching may not be always appropriate:
When I was pursing my CA, coaching was an option only for those who were with silver spoons in their mouth. It was only available in Metro Cites and was pricey as well. Now that CA has gained traction and the general public is also aware of the course (on a funny note; I still remember one of my uncles asking me why I enrolled to CA? I could have been better off graduating BA!!!), there are a lot of Coaching centres mushrooming everywhere. In addition, the collages themselves are trying to integrate the CA course into their regular graduation classes with an attractive promise (kind of) of completing both courses together. However, and this is purely my personal opinion, coaching may not be the right approach to CA. or atleast, do not depend entirely on the coaching. I know I have repeated this a lot through this letter, but it’s very important that you learn the subjects thru practical experience and your own understanding of the same.
- Always Good to take both groups together:
Although you have the option to take one group at a time, and its tempting to study for 4 subjects rather than 8 at a time, I suggest you take both the groups together. The advantage with this approach is that your strong subjects help you to gain the average required to clear the weaker subjects as well. This will also help you clear your exams in first attempt, as I did
Staying Unique 