Tax refund to exporters of 3 more services allowed

Couriers, goods transport agencies, container transportation by rail..The three services are not in the nature of `input services’ but could be linked to export goods and hence the decision to allow refund of service tax.

New Delhi, Feb. 19 The Finance Ministry on Tuesday extended the service tax refund scheme for exporters to three more taxable services, taking the overall number of such services to 13.

The three services qualifying for service tax refund are courier services, goods transport agency services availed for transport of export goods from the ‘place of removal’ (mainly factory gate) to actual place of export i.e inland container depot (ICD)/airport/port and transportation services in containers by rail from the ‘place of removal’ to ICD/airport/port.

These three services are not in the nature of `input services’ but could be linked to export goods and hence the decision to allow refund of service tax.

Service tax paid by exporters on input services used for export goods is neutralised under various existing schemes like drawback scheme.

“This is a welcome move. Initially they (Finance Ministry) had given service tax refund on movement of goods on both rail and road from ICD to port of export. Now they have completed the chain and given it from factory gate to port of export on both rail and road. This would particularly benefit exporters in the hinterland who were paying huge service tax for movement from factory gate to ICD”, said the Director General of Federation of Indian Export Organisations (FIEO).

He, however, rued that the Finance Ministry was not looking to refund service tax on important services like commission paid by exporters to foreign agents, overseas travel for export promotion, fees to clearing house agents and fees paid to chartered accountants for export documentation. “Service tax on these services should also be rebated”, he said.

So far, the Finance Ministry has specified about ten taxable services, which are not in the nature of input service but could be attributable to exports, as services that would qualify for service tax refund.

These include port services provided for export, transport services on road and rail for movement of goods from ICD to port of export, general insurance services, technical testing and analysis agency services, storage and warehousing services and business exhibition services.