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 them cope with the rising rupee, the announcement of the exemption was actually made five months ago in the foreign trade policy in April this year.
The exporting community, however, is not too impressed with the delayed sop. They argue that a host of other services they avail have not been included in the list. Moreover, the fact that the service tax would be refunded and not zero-rated or exempted would only 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 under existing schemes. 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 that it did not meet what he called the “bonafide” demand of trade and industry for zero tax rate on exports.
Fieo added that important services like commission to foreign agents, professional fee, foreign travelling expenses, bank charges on loans, courier services and participation in trade fares 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.