Export of Services

BY
PL.Subramanian
plsubr@gmail.com
25270452
9821807128
 Export of Services
Basic Principle
“Export local products and Services and not
local taxes”

If service is exported, no service tax is payable

Export of services are not exempted, ZERO
Rated
 Export of Services
Relevant Provisions:
 Section 93A gives power to Central Government
to grant rebate of Service Tax paid on taxable
services used as input services
 The Export of Services Rules, 2005
 Rebate of Service Tax on Export of Service
Notification No.11/2005 –ST dated 19th April, 2005
 Rebate of Service Tax on Input services and
Excise Duty on Inputs – 12/2005 ST dated 19th
April, 2005
 Export of Services
Position from 9-4-99-to 28-2-2003
Notification 6/99 –ST dated 9-4-1999 –
Payments received in India in convertible
foreign exchange is exempt.
From 1-3-2003 to 20-11-2003
 Service tax is destination based
consumption tax
 Services consumed abroad is exempt.
 Export of Services
 Position from 20-11-2003 to 14-3-2005
 Service charges received in convertible
foreign exchange is exempt
 From 15-3-2005
 Export of Service Rules
 Export of Services
 Categorisation of Services:
 Immovable property criteria
 Performance based criteria
 Recipient based criteria
 Export of Services
 Immovable Property criteria – conditions:
 Immovable property should be situated
outside India.
 Services provided from India and used
outside India
 Payment in convertible foreign exchange
 Export of Services
 Immovable Property Criteria –Services
covered:
 Examples – Architect service, Auction
service, Interior Decoration, Real Estate
Agency, Commercial or Industrial
Construction etc.
 Export of Services
 Performance Based Criteria
 Services have been performed outside
India
 Services provided from India and used
outside India
 Payment in convertible foreign exchange
 Export of Services
 Performance based criteria
 Examples – Stock broker, Courier, CHA,
Steamer Agent, CFA, Air Travel Agent,
Chartered Accountant, Credit Rating,
Market Research, Port Services, Event
Management, Club or Association.
Transport of goods, etc.

10
 Export of Services
 Recipient Based Criteria – Not used in
relation to commerce or industry
 The recipient of service is located outside
India at the time of rendering the services
 Services provided from India and used
outside India
 Payment in convertible foreign exchange
 Export of Services
 Recipient Based Criteria – Used in relation
to commerce or industry and service
recipient has an establishment in India
 The recipient of service is located outside
India at the time of rendering the services
 Services provided from India and used
outside India
 Payment in convertible foreign exchange
 Service is ordered from outside India
 Export of Services
 Recipient Based Criteria – Services
covered
 Example: Banking and Other Financial
Services, Business Auxiliary services,
Business Support services, Computer
Network services, Intellectual Property
services, Management Consultant’s
services, Manpower Recruitment services
 Export of Services
 Services not classified:
 Air Transport of Passengers embarking in
India for International Journey
 Transport of persons by a Cruise Ship
embarking in any port in India
 Export of Services
 Situs of service Provided- In the cases of
following services, the service shall be
treated as provided in the country in which
the tangible goods are located at the time of
provision of service:
 Management, maintenance or repair
service.
 Technical testing and analysis service.
 Technical inspection and certificate service.
 Export of Services
 Benefits available
 Export of Services without payment of
Service Tax
 Rebate Service Tax paid on Export of
Services
 Rebate of Service tax and Excise Duty paid
on Input Services and Inputs; or
 Refund of unutilised CENVAT Credit
 Export of Services
 Rebate of Service Tax paid
 If service tax is paid at the time of export of
service – service tax is refundable
 Exported to countries other than Nepal and
Bhutan
 Amount of rebate is not less than Rs.500
 Claim application has to be filed with
Assistant Commissioner
 Form ASTR-1
 Export of Services
 Rebate of Service Tax paid
 Application has to be accompanied by
documentary evidence of receipt of
payment in convertible foreign exchange
 Declaration
 Export of Services
 Rebate of Service Tax paid on inputs –
excise duty paid on inputs or service tax
paid on input service is eligible for refund
 Taxable service exported
 Payment received in convertible foreign
exchange
 Excise duty paid input or service tax paid
input service is used in providing taxable
service
 Export of Services
 Rebate of Service Tax paid on inputs
 Rebate is not less than Rs.500
 No CENVAT Credit availed on inputs and
input services availed
 Declaration –Before export of service –
Description, quantity, value, rate of duty and
duty payable on inputs and input services
 Export of Services
 Rebate of Service Tax paid on inputs
 Application to the Assistant Commissioner
 Form ASTR –2
 Application with documentary evidence
 Export of Services
 Refund of unutilised CENVAT Credit
 Taxable service exported
 Export as per procedure
 Claim once in a calendar quarter – If more
than 50% exported , once in a month
 CENVAT Credit not utilised due to export
 Quantum – Refund = (Total CENVAT Credit
taken during the period X Export
turnover)/Total turnover
 Export of Services
 Refund of unutilised CENVAT Credit
 Application in Form A
 Within one year
 Application with the following documents –
Shipping bill, Copy of invoices, BRC,
Relevant extracts of records under
CENVAT Rules, Service Tax Rules
 Export of Services
 Service tax on secondary service providers
Another question raised is about the taxability of secondary
services which are used by the primary service provider for
the export of services, Since the secondary services
ultimately gets consumed/merged with the services that are
being exported no service tax would be leviable on such
secondary services. However in case where the secondary
service gets consumed in part or toto for providing service in
India, the service tax would be leviable on the secondary
service provider. For this purpose both primary and
secondary service providers would maintain the records
deemed fit by them to identify the secondary services with
services that are being exported –Circular 56/5/2003 dated
25th April 2003
 Export of Services
 Circular 56/5/2003 dated 25th April, 2003
withdrawn by Circular 93/4/2007-ST dated
10th May 2007
 Effect of Withdrawal
 Export of Services
 SEZ and Service TAX- Service provided by
the Domestic Tariff Area Unit -Notification
4/2004-ST dated 31-3-2004
“ Exempts taxable service of any description
provided to a developer of Special
Economic Zone or (including a Unit under
construction) Unit by any service provider
for consumption of the services within such
SEZ, from the whole of service tax
payable.”
 Export of Services
 SEZ and Service TAX- Effective 20-5-2009,
if a service is wholly consumed within SEZ
itself, the service provider is not required to
charge service tax at all. In the case of
services consumed partly or fully by SEZ
outside the SEZ, it has to apply for refund.
 Export of Services
 Export Oriented Unit and Service Tax- No
special exemption is provided
 Export of Services
 Export of Software
 Software Development exempt from
Service tax- Not eligible for refund of
CENVAT Credit
 Software is Goods as per Excise Tariff Act
– Eligible for Duty Drawback
 Brand Duty Drawback
Export of Services

Any Question?
Export of Services
THANK YOU
PL.Subramanian
plsubr@gmail.com
25270452
9821807128