Export of Services

Export of Services

With effect from 01/07/2012 export of services is governed by Rule 6A of service tax rules, 1994.

    Rule 6A

The provision of service treated as export when

·   The provider of services is located in Taxable Territory

·   The recipient of service is located outside India

·   The service is not mentioned in Section 66D (negative list)

·   Place of provision is Outside India

·   Payment has been received in convertible foreign currency and

·   Provider & Receiver should be separate legal entities.

    Export Benefits

With the new concepts in service tax export benefits can be summarized as under

1.  Based on POP Rules in case provision of service has taken place outside the taxable territory, the service tax would not be chargeable on such transaction.

2.    NN 39/2012-ST-Rebate on whole of the service tax & cess paid on all Input Services used in providing services exported to any country other than- Nepal, Bhutan.

3.   Rule 5 of CCR- Refund of Service tax to a person who exports services without payment of service tax to the extent of Cenvat credit availed by him on input services or input goods in the ratio of his export turnover to total turnover.

4.  NN-31/2012-ST- Exemption to manufacturer exporter & Merchant exporter from payment of service tax on input services of GTA in a goods carriage from place of removal to where goods are exported.

5.    NN 41/2012-ST- Refund of service tax paid on specified input services used by a merchant exporter or manufacturer exporter of goods.

6.    NN 42/2012-ST- Exemption to manufacturer exporter & Merchant exporters

From payment of service tax calculated on a value of 10% of the FOB value

Of export goods for which the said services used,

On services provided by a commission agent

Located outside India &

Engaged by the exporter of India to cause sale of goods exported by him.

All the export benefits are in relation to refund of input taxes paid on Inputs & Input Services.

In no situation service tax paid on export of services is refunded which was allowed in past under export of service rules.

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