Objective: To provide the exporters to offset infrastructural inefficiencies and associated cost involved.

Two schemes have been introduced by the government

  1. Merchandise Exports From India Scheme (MEIS)

  2. Service Exports From India Scheme (SEIS)

What kind of benefit or reward will be received by the exporter, if exported under MEIS or SEIS?

The exporter will be rewarded by Duty credit scrips if export has done under MEIS or SEIS.

What is Duty Credit Scrips?

  • It is issued to the exporter allowing them to import without paying the import duties.
  • DCS are paper authorizations that allow the holder to import raw material or CAPEX (capital goods)  that will go into the manufacturing of products which is supposed to be exported.
  • DCS usually varies between 3% to 5% under FTP 2015
  • DCS is transferrable
  • DCS can be used to pay
    • Customs Duties
    • Excise Duties
    • Service Tax

Merchandise Exports From India Scheme (MEIS):

Its objective is to offset infrastructural inefficiencies & associated cost involved, thereby enhancing India’s export competitiveness.

Entitlement or Rights under MEIS:

  • In Appendix 3B list of rewards (DCS), percent list is given for various category of products.
  • The basis of calculation of reward would be on Realised FOB value of exports or FOB value of exports as given in the shipping bill whichever is less.

Note: The buyers pay exporter more than the bill value, which includes bank charges, so after deducting the bank charges the remaining value is called realized value)

Export of goods through courier or foreign post offices using e-commerce

  • If FOB value is Rs. 25,000/- or more per consignment that it is entitled to reward under MEIS.
  • Such goods can be exported through foreign post offices at New Delhi, Mumbai & Chennai.

Ineligible categories under MEIS:

  • EOU/EHTP/BTP/STP
  • Supplier made from DTA (Domestic Tariff & Area) units to SEZ units
  • SEZ/FTWZ (Free Trade Warehousing Zone)
  • Service Export
  • Diamond, Gold, Silver, Platinum
  • Export of milk & milk products.

Service Export From India Scheme (SEIS):

Objective:  It is to encourage export of notified services. The notified services & rates of rewards are listed in Appendix 3D.

Eligibility Criteria:

  • As a private limited or limited company, the service provider should have earned net foreign exchange of USD 15,000/- in preceding financial year to be eligible for Duty Credit Scrips.
  • For individual service provider & sole proprietor should have earned net foreign exchange of USD 10,000/- in preceding financial year to be eligible for Duty Credit Scrips.
  • In order to claim the award, the service provider shall have to have an active IEC at the time of rendering such services for which rewards are claimed.

Ineligible:

  • A person or company raising foreign currency loan.
  • Export proceeds realization of clients
  • Sales of securities & other financial instruments
  • Donation

Entitlement or Rights Under Service Export From India Scheme (SEIS):

  • Service provider of eligible services shall be entitled to Duty Credit Scrips at notified rates (as given in Appendix 3D) on net foreign exchange earned
  • Foreign exchange earned through international credit card & other instruments are permitted by RBI shall also be taken into account for computation of the value of exports.

Special Provision:

Government reserve all the rights to amend or change the list of goods or services that come under reward for Duty Credit Scrips (DCS)

Government can change/limit the rate of DCS

Common Provision:

Transitional Arrangement: If an export is made before the new policy is implemented then that exporter, for that particular export, will follow all the rules & regulations given in that particular policy period.

CENVAT / Drawback (Central Value Added Tax):

  • It is a system of granting a credit of duty paid on inputs & input services.
  • Customs duty/excise duty/service tax paid in cash or through debit under DCS shall be adjusted as CENVAT credit.
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