Service tax refund fails to cheer exporters

Last updated: 22 September 2007

NEW DELHI: The finance ministry has approved a list of services, including port-based and transport services, for which exporters will be refunded service tax. While the notification has come at a time when exporters are looking forward to all possible relief to help cope with the rising rupee, the announcement was actually made five months ago in the foreign trade policy in April. Exporters, however, are not too impressed with the delayed sop. They say that a host of other services they avail of have not been included in the list. Moreover, the fact that the service tax would be refunded and not zero-rated or exempted implies it would add to the running around that exporters have to do, they contend. According to a finance ministry statement, exporters will get a refund of the service tax they pay for transporting goods in major and minor ports, and from inland container depots to ports through rail and roads. The government collects 12% service tax along with 3% education cess on services. Exporters already get refund of the service tax paid by them on input services used for exports. The drawback scheme also factors in service tax paid on input services used for exporting goods, the release added. Expressing dissatisfaction with the notification, Federation of Indian Export Organisations (FIEO) president Ganesh Gupta said it did not meet the ‘bonafide’ demand of trade and industry for zero-tax rate on exports. FIEO added that important services such as commission to foreign agents, professional fee, foreign travelling expenses, bank charges on loans, courier services and participation in trade fairs have not been included in the notification. Besides providing exemption from payment of tax on all services, the notification should be made applicable from the date on which such services were brought under the service tax net, Mr Gupta added.

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Service tax refund fails to cheer exporters

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