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Export of Services

This article provides information on the rules and categories for exporting services, including examples and the benefits of exporting services. Learn about the eligibility criteria and the rebates and credits available for service providers.

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Export of Services

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  1. Export of Services by g. natarajan advocate & cost accountant swamy associates

  2. Era of simplicity… Notification 2/1999 Dt. 28.02.1999. Notification 6/1999 Dt. 09.04.1999. Rescinded by Notification 2/2003 Dt. 01.03.2003 Notification 21/2003 Dt. 20.11.2003. Rescinded by Notification 10/2005 w.e.f. 15.03.05

  3. Era of complexity… Export of Services Rules, 2005 Introduced vide Notification 9/2005 Dt. 03.03.2005 With effect from 15.03.2005. Amended by 28/2005 Dt. 07.06.2005 With effect from 16.06.2005. Amended by 13/2006 Dt. 19.04.2006 With effect from 19.04.2006

  4. Basic thumb rules. Service must be provided from India and used outside India. Payment for such service must be received in convertible forex.

  5. Category I The service must be in relation to immovable property situated outside India.

  6. Examples An Indian construction company, building a commercial complex, in Afghanistan. An interior decorator, being engaged for beautification of “White House”. Mining gold in Pakistan.

  7. Category II The service must be performed outside India, at least partly.

  8. Examples Despatch through courier to a foreign destination. Tour operator, covering Pakistan also. Madonna inviting an Indian beautician. Chartered Accountant, auditing the accounts of Britney Spears. Putting up a pandal, along Indo-Nepal boarder, covering a bit of Nepal too.

  9. Category III If provided in relation to business or commerce - the recipient should be located outside India. Otherwise - the recipient should be located outside India, at the time of provision of such service. If the recipient has a presence in India, the order for service must be from outside India.

  10. Examples Consulting engineer, rendering service to a foreign client. Downloading web content, by a foreign national. Soliciting orders for a foreign company. Job work for a foreign principal. Manpower recruitment for a foreign company.

  11. What if services are exported? No Service tax needs to be paid on export of Services. (Rule 4 of Export of Service Rules, 2005) If paid, rebate can be claimed. (Rule 5, ibid and Notification 11/2005) Rebate of duties of excise / service tax, suffered on inputs / input services, can be claimed. (Rule 5, ibid and Notification 12/2005)

  12. What if services are exported? Cenvat can be availed for the inputs / input services used for the exported services. (Cenvat Credit Rules, 2004) Refund of unutilized credit. (Rule 5 of CCR, 2004 & Notification 5/2006)

  13. THANKS

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