The term ‘Export of Service’ is neither defined in the Finance act nor in the Export of services rules.

In International Trade the term ‘export’ is used to mean “selling of services from home country to other markets”. However according to the Export of Service rules, any taxable service shall be treated as export of service “if such service is provided from India and used outside India.

The intention of the government is to relieve exports of all the domestic taxes, to render exports competitive in the international market and to generate foreign exchange by reducing the hassles.

The exporter has the following modes to avail the benefits granted under the Rules:

1. Exemption: (Rule 4): The exporter can export his services without the payment of tax.

2. Rebate/Refund: (Rule 5) : The exported can pay the tax/duty on the inputs or input services and claim a refund/ rebate of the same.

EXEMPTION OF SERVICE TAX ON EXPORT OF SERVICES:

The taxable services, which are exported, are exempt from Service Tax. Service tax, being a destination based consumption tax, is leviable only on those services which are rendered in India except the state of Jammu and Kashmir. However, Rule 6A of service Tax Rules, 1994 provides a meaning to the ‘Export of Services’.

Provision of services provided or agree to be provided shall be deemed to be export of services when:

• The provider of services is located in taxable territory: Taxable territory means any place in India except the state of Jammu and Kashmir.
• The receiver of services is located outside taxable territory: The recipient who receives the services should be located outside India.
• The service is not specified in rule 66D of the act: The Services(provided or to be provided)should not be listed in the Negative List of Services as pee Rule 66D of the Service Tax Act.
• The place of provision of service is outside India: Place of Provision means the location of the recipient of Service which is determined according to the Place of Service Rules, 2012. Place of provision should be outside India.
• The payment is received in convertible foreign exchange: The payment received by the service provider on the services provided outside India, should be in foreign currency that can be convertible.
• The provider and recipient of service are not merely establishments of a distinct person: If the service receiver is of a branch or agency or representational office of service provider, such service will not be considered as export of service and not eligible for service tax exemption.

REBATE/REFUND OF SERVICE TAX ON INPUT SERVICES USED FOR EXPORT OF SERVICES:

Service tax on export of services or service tax on input services used for such export services is subject to refund/rebate according to the conditions provided in the Notification No. 39/2012 .

CONDITION AND LIMITATIONS:

• Service should be considered export of services as notified under Rule 6A of Service Tax Rules,1994
• Duty on the input( on which the rebate is being claimed) has already been paid to the supplier for the same
• Service Tax and cess must have been paid for the input services ( on which the rebate is being claimed) to the service provider
• The total amount of rebate of duty, service tax and cess admissible should not be less than Rs 1000/-
• No cenvat credit has been availed on input services, for which rebate is claimed.

For any assistance in service tax visit Service Tax.

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