Export of service - dues unpaid

Export of services is exempt subject, to the condition that the payment should be received in convertible foreign exchange.

Until the payment is received, the provision of service, even if all other conditions are met, would not constitute export.

 In order to remove the hardship that will be caused due to accrual method, the point of taxation has been changed to the date of payment.

However, if the payment is not received within the period prescribed by RBI, the point of taxation shall be determined in the absence of this rule.

(Usually, RBI allows 6 months for receipt of payment but in certain cases, elongated credit terms are allowable)

You may check the respective provision of extention else pay the service tax by utilisation of Cenvat Credit under claim for rebate and debate the claim.

This way atleast your interest cost is curbed which otherwise is 18% from 01/04/11

The above clarification is NOT provided as a legal opinion. Individual organizations are encouraged to seek professional consultancy from their respective lawyers.

Export of services is exempt subject, to the condition that the payment should be received in convertible foreign exchange.

Until the payment is received, the provision of service, even if all other conditions are met, would not constitute export.

 In order to remove the hardship that will be caused due to accrual method, the point of taxation has been changed to the date of payment.

However, if the payment is not received within the period prescribed by RBI, the point of taxation shall be determined in the absence of this rule.

(Usually, RBI allows 6 months for receipt of payment but in certain cases, elongated credit terms are allowable)

You may check the respective provision of extention else pay the service tax by utilisation of Cenvat Credit under claim for rebate and debate the claim.

This way atleast your interest cost is curbed which otherwise is 18% from 01/04/11

The above clarification is NOT provided as a legal opinion. Individual organizations are encouraged to seek professional consultancy from their respective lawyers.

Dayal

Thanks for your clarification. The Export of service rules 2005 as amended till date only mentions that proceeds shoudl be received in free foreign exchange. There is no linking with FEMA that it is to be realised within 1 year. However the erstwhile section 10A speaks of 1 year limit.

Can you please verify and revert.

Regards,