SERVED FROM INDIA SCHEME


OBJECTIVE & CRITERIA OF THE SCHEME
  • The objective is to accelerate the growth in export of services so as to create a powerful and unique ‘Served From India’ brand, instantly recognized and respected world over.
  • Indian Service Providers of services which are listed in Appendix 41 of HBP v1 and who have free foreign exchange earning of at least Rs. 10 Lakhs in current financial year will be eligible for Duty Credit Scrip under SFIS scheme. For Individual Indian Service Providers, minimum free foreign exchange earnings would be Rs 5 Lakhs."
  • Appendix 41 of HBPv1 provides the list of services which will be entitled for SFIS benefits on foreign exchange earned from 1.1.2011. Services not covered in Appendix 41 of HBPv1 will not be eligible for SFIS benefits on foreign exchange earned from 1.1.2011.


LIST OF REMITTANCES NOT ELIGIBLE FOR THIS SCHEME :
Foreign exchange remittances other than those that are earned for rendering of 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. For calculation of entitlement, following shall not be taken into account.

A) Foreign Exchange remittances :
i. related to Financial Services Sector.

  • Raising of all types of foreign currency Loans;
  • Export proceeds realization of clients;
  • Issuance of Foreign Equity through ADRs /GDRs or other similar instruments;
  • Issuance of foreign currency Bonds;
  • Sale of securities and other financial instruments;
  • Other receivables not connected with services rendered by financial institutions; and

II. earned through contract/regular employment abroad (e.g. labour remittances);
B) Payments for services received from EEFC Account;
C) Foreign exchange turnover by Healthcare Institutions like equity participation, donations etc. (However,remittances received on account of medical treatment, surgery, testing, consultancy and health care provided by the institution shall be eligible.);
D) Foreign exchange turnover by Educational Institutions like equity participation, donations etc. (However remittances received on account of the course fees and consultancy provided by the institution shall be eligible.);
E) Export turnover relating to services of units operating under SEZ / EOU / EHTP / STPI / BTP Schemes or supplies of services made to such units;
F) Clubbing of turnover of services rendered by SEZ / EOU / EHTP / STPI / BTP units with turnover of DTA Service Providers;
G) Service Providers in Telecom Sector (Sr. No 2C of Appendix 10);
H) Foreign Exchange earnings for Services provided by Airline and Shipping Lines Service providers for routes plying from any country X to any country Y only, not touching India at all; and
I) Exports of Goods.

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LIST OF REMITTANCES ELIGIBLE FOR THIS SCHEME :
  • The foreign exchange earned through International Credit Cards and other instruments as permitted by RBI for rendering of service by the service providers shall also be taken into account for the purposes of computation of duty credit entitlement under the scheme.
  • The last date for filing of such application shall be 31st December.
  • The duty credit entitlement certificate shall be valid for a period of 24 months. Revalidation of duty credit certificate shall not be allowed.
  • The service provider shall within one month of the completion of imports made or the expiry of the validity of the duty credit entitlement certificate whichever is earlier, submit a statement of imports made under the certificate to the jurisdictional Regional Authority with a copy to the jurisdictional Excise authorities (service tax cell) wherever applicable.


IMPORTS ALLOWED:

Duty Credit scrip may be used for import of any capital goods including spares, office equipment and professional equipment, office furniture and consumables; that are otherwise freely importable and / or restricted under ITC (HS). Imports shall relate to any service sector business of applicant.


Utilization of Duty Credit scrip earned shall be permitted for payment of duty in case of import of only those vehicles, which are in the nature of professional equipment to the service provider.


As per existing Notification No. 91/2009-Cus, import of vehicles is not allowed under the Served From India Scheme(SFIS), even if such vehicles are freely importable under the Foreign Trade Policy.


However, after the announcement of Annual supplement to the Foreign Trade Policy, vehicles which are in the nature of professional equipment such as Airfield Fire Fighting and Rescue Vehicles (AFFRVs), Heavy Duty Modular Trailer Combination, Reach Stackers etc. for use by the service provider in his regular service business have been allowed to be imported against SFIS scrips.


However, personal vehicles such as motor cars/ Sports Utility Vehicles(SUVs) / Multi Utility Vehicles (MUVs) etc. are not permitted to be imported against SFIS scrips. Notification no. 90/2010-Cus dated 01.09.2010 refers in this regard.


In case of hotels; clubs having residential facility of minimum 30 rooms, golf resorts and stand-alone restaurants having catering facilities, Duty Credit scrip may also be used for import of consumables including food items and alcoholic beverages.



NOTE:

1) The Committee is of the view that just like Cement and Iron for construction work is not allowed under SFIS, similarly, Pipes and Pipe Fittings for the purpose of construction of New Hotel cannot be allowed under SFIS. (Case No. 1: M/s. ITC Limited , Gurgaon File No. 01/94/180/477/AM09/PC- 3 PIC Meeting No. 07/AM10 dt. 6.1.2010. ) Case No. 1: M/s. ITC Limited , Gurgaon

File No. 01/94/180/477/AM09/PC- 3

PIC Meeting No. 07/AM10 dt. 6.1.2010.

Subject:- Clarification regarding import of Pipes and Pipe Fittings under SFIS - for Construction of New Hotel Project.

The Committee considered the case as per agenda. The Committee was of the view that just like Cement and Iron for construction work is not allowed under SFIS, similarly, Pipes and Pipe Fittings for the purpose of construction of New Hotel cannot be allowed under SFIS. The applicant may be informed accordingly.


(2) The entitlement and the goods imported shall be nontransferable.


(3) However, transfer of duty credit scrips / goods imported under the scheme shall be allowed within the service providers of the Group Company and managed hotels, with actual user condition.


The registration of DOT (Department of Tourism) for stand Alone Restaurant is not mandated. A declaration to the effect that Applicant is a Stand alone restaurant will suffice.


In respect supply of Food Parcels to Foreign Airlines, RA’s are advised to recover the wrongly issued SFIS.


On the issue of Shipping Lines / Airlines being issued SFIS on supply of services from country X to country Y, PC25 / 1.1.2008 is final and valid.


On the issue of Marketing services in India, for which payment is made by overseas principal / seller in Foreign Exchange, the FX earned is not eligible for SFIS, since this is not a case of “Foreign Consumer in india” (Like in Tourism sector ) & hence not covered under para 9.53(ii) of Ftp or under any other clause of Para 9.53 of FTP.


(4) Important Notes of PIC on Telecom Sector Services and interpretation of Policy Circular 25 dated 1.1.2008 i.e. MINUTES OF THE POLICY INTERPRETATION COMMITTEE (PIC) MEETING NO.04/AM11 HELD ON 05.07.2010 AT 4.50 PM UNDER THE CHAIRMANSHIP OF SHRI R.S. GUJRAL, DIRECTOR GENERAL OF FOREIGN TRADE.


Subject:- Telecom Sector Services entitlement for SFIS and interpretation of Policy Circular 25 dated 1.1.2008 in respect of Telecom Service Sector.


As decided in the earlier PIC meeting no. 06/10 held on 21.10.2009, the matter was discussed de-novo in respect of the following services provided by the applicant company specifically as well as the Telecom Sector in general.

ANNEXURE I
Sr. No. Service Decision:
1 Indian Subscriber receiving an International Incoming Call from Overseas. Indian Subscriber is using the telecom service as 'not roaming - international' facility. IILDO earns FE from FILDO/FAP/FNDLO and pay in INR to IAP/INLDO of Indian Subscriber to mature the call.
The Service Provider (earning FE in this category) is not covered under Para 9.53 (i) (since the supply of service in this case is not a supply of service from India to any other country) nor under Para 9.53 (ii) (since the supply of service in this case is not a supply of service from India to service consumer of any other country in India but to Indian Subscriber), nor under Para 9.53 (iii) (since the supply of service in this case is within India) nor under Para 9.53 (iv) (since the supply of service in this case is not a supply of service in India relating to exports). Thus, the Committee decided that an IILDO who earns FE for International Incoming calls to Indian Subscribers (Not Roaming - International) of an IAP/INDO is not covered under Para 9.53 of FTP. Such FE earnings are not entitled to SFIS Scheme benefits.

The Committee also observed that on similar lines, for providing an International Outgoing call from Indian Subscriber (Not Roaming - International) to Overseas, an IILDO pays FE to FILDO and collects payment in INR from IAP/INLDO of Indian Subscriber to mature the call.
     
2 Subscriber of FAP - Roaming in India
(a) Makes International Outgoing call to overseas destinations
(a) In this case, IAP earns FE from FAP. However, to mature the call, IAP pays in INR to IILDO and who in turn pays in FE to FILDO for the maturing / connecting the same International Outgoing call. In this case, the Foreign Consumer (of service) is present in India and the supply of service is covered under Para 9.53(ii) of FTP. However, to connect a single Telecom Call, IILDO pays FE to FILDO. Thus, logically FE earned for this call would be FE received by IAP/INDLO minus FE paid by IILDO for maturing the call. As explained by the applicant in the personal hearing, IILDO cannot technically know that the International Outgoing call originated from a subscriber of FAP roaming in IAP telecom circle and treats this call at par with other international Outgoing calls from the IAP subscribers. Thus, the committee agreed that it is not possible to find out the payment made call-wise by IILDO to FILDO (for this category). The above transaction is similar to an export consignment exported on C&F/CIF basis where Indian Exporter collects the freight in FE from overseas (and pays the freight in INR). However, the grant of incentives like FMS/FPS under chapter 3 of FTP is only on FOB terms and not on C&F/CIF terms.

Major part of service was provided by IILDO/FILDO put together. However revenue in terms of FE is collected by IAP and shared with IILDO, in INR, depending upon destination as per their mutual arrangement. As IILDO receives payment in INR from IAP, IILDO are not entitled for SFIS for this portion of earnings in INR.

Since major part of service was provided by IILDO/FILDO put together, the committee decided that to consider '50% of the FE earned in this category' as entitled to SFIS benefits for claim filed by IAP, given the constraints of actual determination of call-wise FE earnings.
     
  Subscriber of FAP - Roaming in India
(b) Receives International Incoming call from overseas destinations
(b) In this case, IAP may earn FE from FAP and IILDO earns FE from FILDO. Further ILDO pays part of the charges in INR to IAP/INLDO for the maturing / connecting the same International Incoming call. In this case, the Foreign Consumer (of service) is present in India and the supply of service is covered under Para 9.53(ii) of FTP. Both IAP as well as IILDO earn FE and are entitled for SFIS.

However, to connect a single Telecom Call, IILDO earns FE from FILDO and pays part of it to IAP/INLDO. Thus, in case of SFIS claim by IILDO, logically FE earned for this call would be FE received by IILDO minus INR paid to IAP/INLDO by IILDO for maturing the call from the FE earned for a single call. While IAP is entitled for SFIS on the total FE earned, IILDO is entitled only for the part of service provided by IILDO itself. However it may not be possible for IILDO to segregate FE received corresponding to Indian subscriber and subscriber of FAP roaming in India. IILDO, with the assistance of IAPs/INLDOs, would be required to segregate FE received corresponding to Indian subscriber and subscriber of FAP roaming in India for claiming SFIS benefits.

This is a matter similar to the one discussed in 2(a) above involving completion of service by more than one Telecom Service Company/Firm. For uniformity of decision, the committee decided that to consider '50% of the FE earned in this category' as entitled to SFIS benefits by the IILDO.
     
  Subscriber of FAP - Roaming in India
(c) Makes Outgoing calls within India to National destinations
(c) In this case, IAP earns FE from FAP, pays INLDO in INR. In this case, the Foreign Consumer (of service) is present in India and the supply of service is covered under Para 9.53(ii) of FTP. IAP earn FE and are entitled for SFIS on the total FE earned.
     
3 Indian Subscriber of IAP - Roaming overseas (outside India) In this case, IAP pays FE to FAP (vice versa of 2 above). Applicant has informed that these transactions are separate transactions and hence cannot be clubbed to FE earned for services in 2 above.

The Committee agrees to this. Accordingly it was decided that Para 3(i) of PC 25 dated 1.1.2008 be deleted.
     
4 Other Services provided by Telecom Sector.
(i) SMS/Data/Email
(i) SMS/Email are treated as Data Services. Currently FE is not earned for delivery of SMS/Email and / or other Data to the Subscriber of FAP roaming in India. Presently the policy principle of Bill and keep' i.e. sender keeps all (SKA) is followed in the Telecom sector
     
  Other Services provided by Telecom Sector.
(ii) Rentals from Optic Fibre Cable in India
(ii) The Telecom Service Sector Company/Firm (earning FE in this category by way of rentals for time sharing or other methods like space usage charges per MB or per GB) is not covered under Para 9.53(i) (since the supply of service in this case is not a supply of service from India to any other country) nor under Para 9.53 (ii) (since the supply of service in this case is not a supply of service from India to service consumer of any other country in India), nor under Para 9.53 (iii) (since the supply of service in this case is within India) nor under Para 9.53 (iv) (since the supply of service in this case is not a supply of service in India relating to exports). Thus, the Committee decided that Telecom Service Sector Company/Firm who earns FE from rentals of 'Optic Fiber Cable in India' is not covered under Para 9.53 of FTP. Such rental FE earnings could also be categorized under Rentals from Private Lease Circuits in India. Such FE earnings are not entitled to SFIS Scheme benefits.
     
  Other Services provided by Telecom Sector.
(iii) Rentals from Optic Fibre Cable Overseas
(iii) The Asset is located overseas. The Telecom Service Sector Company/Firm (earning FE in this category by way of rentals for time sharing or other methods like space usage charges per MB or per GB) is not covered under Para 9.53(i) (since the supply of service in this case is not a supply of service from India to any other country, asset is located overseas, including in international waters)) nor under Para 9.53 (ii) (since the supply of service in this case is not a supply of service from India to service consumer of any other country in India), nor under Para 9.53 (iii) (since the supply of service in this case is not from India) nor under Para 9.53 (iv) (since the supply of service in this case is being provided entirely overseas and is not a supply of service in India). The committee observed that there is likeness to transportation of gas using Gas Pipeline (located overseas - Pipeline is entirely owned by an Indian Company /Firm) for which Company /Firm could earn FE from overseas for transporting the Gas entirely outside India. Thus there is no service from India, as the assets are entirely located overseas. Thus, the Committee decided that Telecom Service Sector Company/Firm who earns FE from rentals of 'Optic Fiber Cable located overseas' is not covered under Para 9.53 of FTP. Such rental FE earnings could also be categorized under Rentals from International Private Lease Circuits. Similar is the position of rentals from Submarine Cables located in International Waters (wholly or partly owned). Such FE earnings are not entitled to SFIS Scheme benefits.
     
  Other Services provided by Telecom Sector.
(iv) Internet
(iv) IISP earns FE from FISP for using nodes. The Telecom Service Sector Company/Firm (earning FE in this category by way of rentals for time sharing or other methods like space/capacity usage charges per MB or per GB) is not covered under Para 9.53(i) (since the supply of service in this case there is no physical flow of service from India to any other country) nor under Para 9.53 (ii) (since the supply of service in this case is not a supply of service from India to service consumer of any other country in India), nor under Para 9.53 (iii) (since the supply of service in this case is not from India, but is completed entirely in India) nor under Para 9.53 (iv) (since the supply of service in this case is being provided entirely overseas and is not a supply of service in India relating to exports). The committee observed that there is likeness to transportation of gas using Gas Pipeline (located partly in India and partly overseas - Indian portion fully owned by an Indian Partner) for which Indian Partner could earn FE from overseas for transporting the Gas entirely within India. Thus, the Committee decided that Telecom Service Sector Company/Firm who earns FE from FISP is not covered under Para 9.53(i) of FTP. Such FE earnings are not entitled to SFIS Scheme benefits.
     
  Other Services provided by Telecom Sector.
(v) Cable Landing Stations (CLS), maintenance of submarine cables
(v) The Telecom Service Sector Company/Firm owing CLS (earn FE in this category by way of rentals for time sharing or other methods like space/capacity usage charges per MB or per GB) from International Consortium for providing Power boost, leasing transmission equipment, breakdown services, maintenance services to submarine cables or CLS. Such FE earning is covered under Para 9.53(i) (since the supply of service in this case there is physical flow of service from India to any other country (which includes international waters where the submarine cables are located). Such service is similar to service of providing drilling rigs for offshore operations in international waters. The CLSs are at one end of the network of cables and therefore the committee felt that some export of service from India takes place. Thus, the Committee decided that Telecom Service Sector Company/Firm who earns FE for Maintenance of CLS / submarines cables located in international waters is covered under Para 9.53(i) of FTP and such FE earnings are entitled to SFIS Scheme benefits.
     
5 Interpretation of the words in Para 9.53
(iv): 'relating to exports'
The Committee, further, decided that the words 'relating to exports' appearing in Para 9.53(iv) would cover services provided in relation to export of goods (like for the port services on export cargoes). In view of this, PC 6 dated 8.6.2005 be rescinded.
     
6 PC 25 dated 1.1.2008 The Committee, further, decided that Para 3(i) of PC 25 dated 1.1.2008 be deleted, in light of the technical inputs received from TRAI in the PIC meeting and the factual position recorded in this minutes.


Note: Abbreviations used in the Minutes are as under:

  ILDO International Long Distance Operator (FILDO - Foreign ILDO, IILDO - Indian ILDO)
  AP Access Provider ((FAP - Foreign AP, IAP - Indian AP)
  NLDO National Long Distance Operator (FNLDO - Foreign NLDO, INLDO - Indian NLDO)
  FE Foreign Exchange
  INR Indian Rupees
  ISP Internet Service Provider (FISP - Foreign ISP, IISP - Indian ISP)


(5) Clarification in SFIS Scheme for Import of Vehicles:
  • Para 3.12.6 of FTP permits Utilization of Duty Credit scrip earned for payment of duty in case of import of only those vehicles, which are in the nature of professional equipment to the service provider.
  • CUS CIR NO. 38/2010 DATE 27/09/2010 has further clarified this as given below.
  • As per existing Notification No. 91/2009-Cus, import of vehicles is not allowed under the Served From India Scheme(SFIS), even if such vehicles are freely importable under the Foreign Trade Policy.
  • However, after the announcement of Annual supplement to the Foreign Trade Policy, vehicles which are in the nature of professional equipment such as Airfield Fire Fighting and Rescue Vehicles (AFFRVs), Heavy Duty Modular Trailer Combination, Reach Stackers etc. for use by the service provider in his regular service business have been allowed to be imported against SFIS scrips.
  • However, personal vehicles such as motor cars/ Sports Utility Vehicles(SUVs) / Multi Utility Vehicles (MUVs) etc. are not permitted to be imported against SFIS scrips. Notification no. 90/2010-Cus dated 01.09.2010 refers in this regard.



Annexure 1 to the Public Notice 25(RE 2010)/2009-2014 dated18th January 2011
APPENDIX 41
LIST OF SERVICES
For the purpose of Served from India Scheme


SECTORS AND SUB-SECTORS
1. BUSINESS SERVICES
A. Professional services
  • Legal services
  • Accounting , auditing and bookkeeping services
  • Taxation services
  • Architectural services
  • Engineering services
  • Integrated engineering services
  • Urban planning and landscape architectural services
  • Medical and dental services
  • Veterinary services
  • Services provided by midwives, nurses, physiotherapists and paramedical personnel


B. Research and development services
  • R&D services on natural sciences
  • R&D services on social sciences and humanities
  • Interdisciplinary R&D services


C. Rental/Leasing services without operators
  • Relating to ships
  • Relating to aircraft
  • Relating to other transport equipment
  • Relating to other machinery and equipment


D. Other business services
  • Advertising services
  • Market research and public opinion polling services
  • Management consulting service
  • Services related to management consulting
  • Technical testing and analysis services
  • Services incidental to agricultural, hunting and forestry
  • Services incidental to fishing
  • Services incidental to mining
  • Services incidental to manufacturing
  • Services incidental to energy distribution
  • Placement and supply services of personnel
  • Investigation and security
  • Related scientific and technical consulting services
  • Maintenance and repair of equipment (not including maritime vessels, aircraft or other transport equipment)
  • Building- cleaning services
  • Photographic services
  • Packaging services
  • Printing, publishing
  • Convention services
2. COMMUNICATION SERVICES
A. Audiovisual services
  • Motion picture and video tape production and distribution service
  • Motion picture projection service
  • Radio and television services
  • Radio and television transmission services
  • Sound recording


3. CONSTRUCTION AND RELATED ENGINEERING SERVICES
  • General Construction work for building
  • General Construction work for Civil Engineering
  • Installation and assembly work
  • Building completion and finishing work


4. EDUCATIONAL SERVICES
  • Primary education services
  • Secondary education services
  • Higher education services
  • Adult education


5. ENVIRONMENTAL SERVICES
  • Sewage services
  • Refuse disposal services
  • Sanitation and similar services


6. HEALTH-RELATED AND SOCIAL SERVICES
  • Hospital services


7. TOURISM AND TRAVEL-RELATED SERVICES
  • Hotels and Restaurants (including catering)
  • Travel agencies and tour operators services
  • Tourist guides services


8. RECREATIONAL, CULTURAL AND SPORTING SERVICES
  • Entertainment services (including theatre, live bands and circus services)
  • News agency services
  • Libraries, archives, museums and other cultural services
  • Sporting and other recreational services


9. TRANSPORT SERVICES
(A) Maritime Transport Services
  • Passenger transportation
  • Freight transportation
  • Rental of vessels with crew
  • Maintenance and repair of vessels
  • Pushing and towing services
  • Supporting services for maritime transport
(B) Air transport services
  • Rental of aircraft with crew
  • Maintenance and repair of aircraft
(C) Road Transport Services
  • Passenger transportation
  • Freight transportation
  • Rental of Commercial vehicles with operator
  • Maintenance and repair of road transport equipment
  • Supporting services for road transport services
(D) Services Auxiliary To All Modes Of Transport
  • Cargo-handling services
  • Storage and warehouse services
  • Freight transport agency service