NEW DELHI: The new, easier rules to claim service tax refunds announced on Thursday were still falling short, say exporters, who have Rs 2,000
crore pending with the finance ministry. Exporters are also peeved that the new rules do not allow them to put in claims from 2007 onwards, when the refund policy was introduced.
In a circular issued Thursday, the Central Board of Excise and Customs (CBEC), the apex body for indirect taxes, allowed claiming of refunds for the last six months based on self-certified documents. The circular has been on the cards from February 26, when the foreign trade policy was announced.
The Federation of Indian Export Organisations (Fieo), the main exporters’ association, said the government should allow refund of service tax on all eligible services, irrespective of when they were included in the refund scheme.
Expressing his dissatisfaction, Fieo president A Sakthivel pointed out that service tax claims should be permitted within six months of the date of export or the date of receiving proceeds, whichever is later, because some services such as commission to foreign agents are used mostly after exporters have been paid by their overseas customers.
“If export proceeds are realised after six months from the date of exports (RBI allows one year for realisation of export proceeds), such claims will be time-barred under the present stipulation,” he said.
Under the new rules, exporters will be able to claim service tax refund for business done between March and June 2008 quarter by December 2008. To make claims less tedious, the new rules allow exporters to certify their own statements, which will have to be accompanied by Foreign Exchange Remittance Certificates that show how much forex they have received. Where banks have not issued FIRC, the exporter’s certified bank statement can be given. The government will calculate the refund based on the total forex received by an exporter without deducting the bank charges.
Exporters will no longer need to submit registration certificate of their service providers or submit any original documents. Tax department officials will physically verify documents only if there is an in-depth enquiry into a claim, the CBEC circular said. The CBEC has also instructed its field officials to sanction refund claims expeditiously.
The finance ministry had allowed tax refunds on select services from October 2007. It now allows refunds on 19 services, including banking and other financial services, port services, transport of goods by road and railways, general insurance and technical testing and analysis.
Source : The Economic Times