We earn foreign exchange through services like star hotels, rentals of service apartments, restaurants and other services in the tourism sector, besides sale of immovable property. Please let us know whether we can get Served from India scrips (SFIS) for foreign exchange earned in the previous two years, whether the benefits will be affected if we sell our business and whether we can import capital goods under Export Promotion Capital Goods (EPCG) scheme.
Hotels of one-star and above (including managed hotels) and heritage hotels approved by the Department of Tourism (DoT) and other service providers in the tourism sector registered with the DoT, as well as clubs having a residential facility of a minimum of 30 rooms, were entitled to SFIS at 5 per cent of foreign exchange earned, but from the current year the entitlement for all service providers is raised to 10 per cent. Foreign exchange earnings from standalone restaurants and real estate services involving your own or leased property or on a free or contract basis were and are eligible for 10 per cent SFIS. Please note that SFIS is available for services and not for sale or for certain remittances mentioned in Para 3.6.1 of Handbook of Procedures, Vol-1 (HB-1).
You can pay duty on import of capital goods through SFIS. You can import capital goods under the EPCG scheme and render the above services and discharge your obligation through foreign exchange earnings and there is no restriction on that even if you claim SFIS against the same. There is also no restriction that only the foreign exchange earned in excess of the annual average will earn SFIS.
SFIS is not transferable except to managed hotels and group companies, but if you transfer the business, the transferee can use the SFIS. You can apply for SFIS within two years from the last date for application and the SFIS will be issued with a late cut prescribed in Para 9.3 of HB-.
Under the new Foreign Trade Policy (FTP), there is a value addition stipulation of 15 per cent for advance authorisations. Is there any similar stipulation under the duty drawback scheme?
The duty drawback scheme stipulates only positive value addition.
In the previous FTP, the Focus Market scheme, Focus Product scheme or Vishesh Krishi Gram Udyog scheme benefits were allowed on foreign agents’ commission. Is there any change now?
Under the new FTP, you can claim the above benefits on commission also but only up to 12.5 per cent of the FOB value.
The new FTP says that we need not surrender export incentives, if export proceeds are written off, but are there any limits for that?
As per the FTP, the facility of not surrendering incentives is not available against self write-offs, but only against specific write-offs granted by the Reserve Bank of India. Moreover, India's Foreign Mission will have to certify about the fact of non-recovery of export proceeds. For the information of banks, the Reserve Bank of India will issue necessary instructions in this regard.
Business Standard invites readers’ SME queries related to excise, VAT and exim policy. You can write to us at
smechat@business-standard.com