FIEO criticises new service tax norms

NEW DELHI: Service sector exports would suffer a severe blow due to the adverse impact on the new service tax rules, the Federation of Indian Export Organisations (FIEO) said here on Friday.

The new rule would affect hotels, tourism, hospitals and education sectors where buyers of the services travel to India to consume such services, FIEO president O P Garg said in a statement issued here.

The new rule would also add to handling cost of services at ports, since container freight stations or inland container depots which are presently exempt from service tax, exporters feel.

The new rules eliminate the exemption available to services under Mode 2 of WTO classification, Mr Garg said. The imposition of tax amounting to 10.2% would make services under Mode 2 less competitive.