NEW DELHI: There could be further relaxation in service tax refund rules for exporters, albeit with a time lag. Exporters claiming input duty
reimbursements under the duty drawback scheme may be allowed to claim service tax refunds with retrospective effect. Such exporters had been disqualified from claiming service tax refunds till December last year when the government decided to amend rules to include them under the scheme.
However, finance ministry officials say it will be difficult to make the changes before the new government is in place as the amendments have to be part of the Finance Bill. The full Budget for 2009-10 is likely to be announced in July.
A delegation from the Federation of Indian Export Organisations (FIEO) met finance ministry officials on Friday to discuss refund issues which were not addressed by the clarification issued by the Central Board of Excise & Customs (CBEC) on Thursday.
Exporters pointed out that the circular had not sorted out the problems of exporters who had exported under the drawback scheme as no clarification had been issued about the date from which the amendment allowing grant of service tax refund to them would be applicable. “We want the refunds should be made not from December 2008, when the notification was issued, but with retrospective effect from the time the government decided to give service tax refunds in October 2007,” FIEO director-general Ajay Sahai said.
The finance ministry, while open to the idea, may not be able to make the required changes in rules immediately. “We would need to make changes in the Finance Bill if we amend rules further to allow exporters claiming drawback to get service tax refunds with retrospective effect. This can be done only when the new government announces the full Budget for the fiscal in July,” a finance ministry official said.
FIEO has also demanded that the government should allow service tax refund of all eligible services irrespective of their date of inclusion from the time when the facility was notified in October 2007. The government has, till now, allowed refund of taxes on 19 services. However, the announcements have been made in batches over the last two years.
In a clarification issued on Thursday, the finance ministry eased regulations for filing by a number of steps including increasing the time period for filing claims from two months to six months for past cases and allowing certified copies of documents for filing instead of the originals.
Services on which refunds are allowed include banking and other financial services, port services, transport of goods by road and railways, general insurance, technical testing & analysis, storage & warehousing, business exhibition services and specialised cleaning services.
Source : The Economic Times