Definition of export of services in for review

NEW DELHI: The Finance Ministry (MoF) is once again in a tizzy over the controversial issue of export of services and the levy of service tax. Less than a month after clarifying that export of services will not attract service tax, the MoF has now decided to take a closer look at the very definition of export of services. The CBEC will come out with another clarificatory circular which may list out specific services which fall under the category of export of services and would qualify for the exemption. The other option is give more conceptual clarity on export of services by giving certain illustrations, said senior officials. There have been queries, for instance, on whether services rendered by recruitment agencies shortlisting candidates for foreign-bound vessels can be construed as export of services. Representations have also come in seeking a clarification on whether technical knowhow provided for plant and machinery can be categorised as export of services. The CBEC is planning to examine the list of services specified in the Exim policy as there have been queries on whether this could be made applicable to service tax as well. The exim policy, which has introduced a scheme to promote export of service services, contains a detailed list of sectors covering business services (which includes professional services, computer and related services, R&D services, real estate services, rental and leasing services without operators, communication services), construction and related engineering services, financial services, environmental services, tourism and travel related services, transport services, and other services not included elsewhere. To promote export of services from these sectors, the government has allowed duty-free import of consumables etc. up to 10% of the average foreign exchange earnings in the previous three years. The CBEC is also planning to look at the definition of export of services adopted in the general agreement on trade in services (GATS) categorised on the basis of the mode of delivery of the service in question. At present, an 8% service tax is being levied for all services rendered or consumed within India even if the payment is received in foreign exchange. Prior to this year's budget, payments received in foreign exchange and not repatriated outside India were exempted from service tax. The exemption was, however, withdrawn in this year's budget. Later, the CBEC clarified that export of services would be outside the service tax net even after the withdrawal of the notification.

Definition of export of services in for review

The Finance Ministry (MoF) is once again in a tizzy over the controversial issue of export of services and the levy of service tax.

More from our Partners

Popular Categories

Hot on Web

In Case you missed it

Top Searched Companies

Latest News

Download ET APP

Follow us on

become a member