In a relief to exporters, the Union Budget 2012-13 has proposed a new scheme that will simplify refunds of service tax to them. Exporters will no longer have to put up with voluminous documentation or verification.

“As an added incentive, such refunds will also be admissible for taxes on taxable services that have been exempted,” the Finance Minister, Mr Pranab Mukherjee, said in his speech.

He said though the problems faced by exporters of goods with respect to taxes on input services was addressed earlier this year, disbursement of taxes that go into the export of services has been an irritant for long.

The Commerce and Industry Minister, Mr Anand Sharma, said the new scheme to make refunds easier will help bring down the transaction costs for exporters.

The Commerce Secretary, Dr Rahul Khullar, said the Finance Minister has responded positively to complaints from exporters that they were troubled by delays in getting such refunds.

Though the Budget has proposed to raise the service tax rate from 10 per cent to 12 per cent, Mr Sharma said the hike is within acceptable limits given that services account for 59 per cent of the country’s GDP.

There is also a proposal to tax all services except those under 17 heads that have been placed in the negative list.

Mr M. Rafeeque Ahmed, President, Federation of Indian Export Organisations, suggested that services exclusively used for exports should form part of the negative list of services to be notified shortly. He said the clarity on export of services would reduce litigation.

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