With a major part of exporters’ woes subsiding thanks to the strengthening dollar, exporters now have some more reason to cheer. The finance ministry has extended service tax refund to three more export-related services. This will take the total number of such services to 19.

Exporters will now get tax refund on services provided in relation to sale and purchase of foreign currency under banking and other financial services as well as under foreign exchange broking services from May 16. Service tax refund is also available on the supply of tangible goods, where the right of possession and effective control is not transferred. This will be treated as export if the goods are located outside India during the period of their use by the recipient.

The Central Board of Excise and Customs (CBEC) has also introduced an optional scheme for service tax payment on purchase or sale of foreign currency (including money changing). Service tax will be levied on this from May 16.

“Where the consideration (commission) for the services provided in relation to purchase/sale of foreign currency is not explicitly indicated, the person liable to pay service tax has been given the option to pay service tax calculated at the rate of 0.25% of the gross amount of currency exchanged,” the CBEC has said.

The ministry has also notified levying of service tax on information technology, software services, investment management services under unit-linked insurance plan, internet telecommunication services and services provided by stock exchanges, commodity exchanges and clearing houses as was announced by finance minister P Chidambaram in Budget 2008-09. The notification follows President Pratibha Patil giving her assent to the Finance Bill on Saturday.

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0 responses to “Service tax refund extended to 3 more export-based services”

  1. Mohamed Athif says:

    Dear Sir, We are an exporting company who are getting our food items packed thru a different company. our packer is charging us service tax for his packing charges. since the final product is fully exported, can we claim service tax excemption or refund. please advice.

    Regards/Athif(9840622582)

  2. Divakar says:

    We are software developer Indian compnay (subsidiary of US) in Noida. We understand that our services should qualify as export of services for service tax purposes from this year onwards under the new taxable category of information technology services (ZZZZe).

    We are proposing to register and file refund claims with respect to the service tax charged on our input services used to provide the exported services. The most significant services on which we pay service tax is Rent, transportation (cab services), Internet Bandwidth and Canteen. We want to seek your advice on the possibility of availing credit of the service tax paid by us on such services and subsequently also claiming refund of the same.

    • GAUTAM JOSHI says:

      Dear Divankar,

      You can claim your excess input service tax credit received on input services as refund under notification number 5/2006 on year-on-year basis.

      Regards.

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