Govt exempts exporters from service tax

Govt exempts exporters from service tax

New Delhi: Providing relief to exporters hit by the rise in rupee value, the government has announced they would be exempted from tax on services rendered by ports, road transport and railways.

“The government has issued a notification providing refund of service tax paid by exporters on four taxable services, which are not in the nature of input services but could be linked to export goods," said a Finance Ministry statement on 17September.

The government collects 12% service tax along with 3% education cess on services.

Exporters already get refund of service tax paid by them on input services used for exports. Drawback scheme also factors service tax paid on input services used for exporting goods.

In July, the Finance Ministry had provided a financial package of 1,400 crore to exporters, especially to the textile, handloom, handicraft and other labour-intensive industries, to cushion the impact of rupee appreciation. The Indian unit has appreciated by over eight per cent since January this year.

Although Commerce and Industry Minister Kamal Nath had announced government’s intention to exempt exporters from service tax in the April supplement of Annual Foreign Trade Policy, the Finance Ministry took about six months to issue a notification in this regard.