Export of Services - Rules notified

By Vijay Kumar

Government has notified the Export of Services Rules 2005. Services partly provided in India and partly abroad will be deemed as exports. Export of services can be done without payment of tax and if tax is paid, rebate will be given. Services for which payment is received in convertible foreign exchange are already exempted. Further export cargo is also exempted. With the notification of these rules, the two notifications dealing with export cargo and receipts in foreign exchange are rescinded. Consequently Rule 5 of the Cenvat Credit Rules is amended to provide for refund of Service Tax credit when services are exported. But strangely Rule 5 allows refund only to a manufacturer. It is beyond logic why this is not allowed to a service provider.

NOTIFICATION NO 9 and 10 /2005-Service Tax, Dated : March 3, 2005