|
|
Changes in Export/Import of Services Rules
[Prepared By: CA Pradeep Jain & Sukhvinder Kaur,
LLB[FYIC],
Jodhpur, Rajasthan]
March 4, 2011
Introduction: -
The Export of Service Rules, 2005 provides that there will no service
tax on the export of services. In these rules, the criteria are prescribed
as to what will constitute export of service.
In Taxation of Services (Provided from Outside India and Received in
India) Rules, 2006 the services received from outside India are taxed.
Now, Budget 2011 changes have been made in these Rules. The changes in
Export of Service Rules, 2006 have been made vide Notification No.
12/2011-ST dated 01.03.2011. And similar re-arrangement has been effected
in the Taxation of Services (Provided from Outside India and Received in
India) Rules, 2006 vide Notification No. 13/2011-ST dated 01.03.2011.
These changes will come in effect from 1st April, 2011.
Export of services: - It is very easy to define export of goods.
It will be regarded as export when they leave Indian Territory for foreign
destination. But it is very difficult to define export of services.
Nothing moves physically outside India. For regarding any service as
exported, the three criteria have been fixed by the Government. These
criteria are defined in Rule 3 of the Export of Service Rule. These
criteria are:-
- Immovable property situated outside India: - When the specified
services in this criteria are provided to an immovable property situated
outside India. It will be termed as export of services.
- Partly in India and Partly outside India: - Under this criteria, the
services will be regarded as exported if they are partly performed in
India and partly outside India.
- Service recipient situated outside India: - The services provided to
foreign national will be regarded as export of services.
Further, in all the cases, the remittance should come in foreign
currency.
Now, the services are listed under criteria 1 and 2 and rest of services
has to fulfill the criteria number 3.
Changes in this budget: - The following changes have been made
in this budget for export of services.
- Services provided by builders covered under Section 65(105)(zzzzu)
are added to criteria number 1. Thus, the services provided for this
category of service in relation to an immovable property situated
outside India will be termed as export of service.
- Rail travel agent, health check up or preventive care are added in
criteria number 2. Thus, if the service is provided partly in India and
partly outside India then it will be regarded as export of service.
- Earlier the services of credit rating agency, market research
agency, technical testing and analysis service, transport of goods by
air, Goods transport agency (transport of goods by road), opinion poll
and transport of goods by rail were covered under criteria number 2. But
these are deleted from the same. Thus, these will fall under residual
third category. Hence, these services will be termed as export of
service if the service recipient is located outside India and amount is
received in foreign convertible currency. The condition of performance
partly in India and partly outside India has been removed for these
categories.
Similarly, on the same tune, the amendment is made for import of
services also.
Go to
"Member's alley" Listings
|
|
