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Service Tax on SEZ units

Sandeep (Self Employed) (125 Points)

23 July 2010

My company provides Manpower Recruitent services. One of my clients is an SEZ unit in Gurgaon.

Can anyone clarify on whether SEZ units are exempt from payment of Service Tax for Manpower Recruitment services? If yes, then are there are specific records or documents I need to get from them to avoid problems later.

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Harpreet (* * * * * *) (1670 Points)
Replied 23 July 2010

Kindly read this article on ur query.

Who is responsible to pay Service Tax:

The service provider is responsible to pay service tax. However, in cases, where the provider of taxable service is located outside India and the recipient of service is located in India, the recipient of service is responsible for payment of service tax. The responsibility to pay service tax under such situations is determined by the provisions made under section 66A of the Finance Act, 1994, read with Taxation of Services (Provided from outside India and received in India) Rules, 2006

Scope of Service:

Credit card services are presently taxable under banking and other financial services. The proposal is to tax comprehensively all services provided in respect of, or in relation to, credit card, debit card, charge card or other payment card in any manner. The major services provided in relation to such services are specifically mentioned under the definition “credit card, debit card, charge card or other payment card service”.
(Ref: Joint Secretary (TRU)’s letter D.O.F.No. 334/4/2006-TRU dated 28.02.2006)

General Exemptions:

Sr.No.	Notification No.	Nature of exemption
1	16/2002	Services provided to United nations or any International Organisation
2	12/2003	Exemption to value of goods and material sold during the course of providing taxable service, subject to conditions laid down in the notification.
3	4/2004	Service provided to a developer of Special Economic Zone or Unit located in SEZ
4	6/2005	Exemption from service tax for taxable services upto gross value of Rs. 4 lakhs, in case of service providers whose gross turnover for the preceding financial year was less than Rs. 4 lakhs ( w.e.f 01.04.2005)

RAMESH KUMAR VERMA ( CS PURSUING ) (43848 Points)
Replied 23 July 2010

and also noted the Notification -

Notification New Delhi, the 1st March, 2008

No. 8/2008-Service Tax 11 Phalguna, 1929 (Saka)

G.S.R. (E).–In exercise of the powers conferred by sub-section (1) of section 93 of the

Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in

the public interest so to do, hereby makes the following further amendment in the notification of

the Government of India in the Ministry of Finance (Department of Revenue), No. 6/2005-

Service Tax, dated the 1st March, 2005 which was published in the Gazette of India,

Extraordinary, vide number G.S.R. 140(E) of the same date, namely:-

In the said notification, for the words “eight lakh rupees”, wherever they occur, the words “ten

lakh rupees” shall be substituted.

2. This notification shall come into force on the 1st day of April, 2008.

(Unmesh Wagh)

Under Secretary to the Government of India

[F. No. 334/1/2008-TRU]

Note:– The principal notification No. 6/2005-Service Tax, dated the 1st March, 2005 was

published in the Gazette of India, Extraordinary, vide number G.S.R. 140(E), dated the 1st

March, 2005 and was last amended vide notification No. 4/2007-Service Tax, dated the 1st

March, 2007 vide number G.S.R. 158(E), dated the 1st March, 2007.

Samir Banerjee (Manager) (32 Points)
Replied 28 July 2010

Originally posted by : Sandeep
	My company provides Manpower Recruitent services. One of my clients is an SEZ unit in Gurgaon. Can anyone clarify on whether SEZ units are exempt from payment of Service Tax for Manpower Recruitment services? If yes, then are there are specific records or documents I need to get from them to avoid problems later.

As per Notification 9/2009-ST dt 03/03/2009 as amended by Notification No. 15/2009-ST dt 20/05/2009, the services rendered to SEZ units are wholly exempted or exempted through refund route. Any service tax paid towards service rendered from outside SEZ and used by SEZ unit within SEZ premises will be exempted but through refund route, provided the nature of service should be Approved Specified Service of SEZ Unit for their authroised operation as per LOA.

Any service which is wholly rendered and utilized within SEZ Zone is exempted from service tax upfront under above notifications.

N.K.Bharath Kumar (Chartered Accountant) (60 Points)
Replied 11 November 2010

Wt about the SEZ unit importing services from outside India? Are they liable to pay service tax in the capacity of service receiver?

sh (service) (46 Points)
Replied 26 November 2010

Respected experts

Futher to this my query, for the company proniding manpower services to SEZ, which is not maintaining separate books of accounts for exempted & non exempted serviceswhat are the obligations left towards department

to pay 6% of value of exempted service or

to calculate proportionate credit attributable to exempted services

or to only intimate the service tax deptt abot service to SEZ & pay nothing

Kindly advice

Thanks a lot