The Hindu Business Line : FIEO seeks tax waiver on services consumed abroad

THE Federation of Indian Export Organisations (FIEO) has made a case for adoption of "place of supply rules" for the purpose of levy of service tax. The federation has said that services supplied outside India should not be subjected to service tax.

Reacting sharply to the rule that requires Indian entities to pay service tax on services consumed outside India, the FIEO President, Mr O.P. Garg, said that this would increase the cost of exports and make Indian products less competitive.

He highlighted that exporters avail themselves of various services including transport services, exhibition services for marketing and sale of export products and commission agents, etc, from non-resident Indians. Mr Garg said that service tax on such services would increase the burden on exporters.

Mr Garg expressed disappointment that individuals alone have been exempted from service tax on the services received and consumed abroad by them.

He pointed out that services consumed abroad by Indian entities for the purpose of exports and commercial purposes would continue to be subjected to service tax.

The FIEO chief also said in a statement issued here that imposition of service tax, fringe benefit tax and delay in refund of input stage VAT are likely to affect the competitiveness of Indian exports. He urged the Finance Ministry to look into the whole issue of taxation on exports in a larger perspective.

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