SEZs get service tax boost

In order to increase the ambit of service tax exemption to special economic zones (SEZs), the Union government has allowed units and developers in SEZs to claim refund of tax paid irrespective of whether the services are consumed inside or outside the zones.

Earlier, only the service provider was eligible for tax exemption for services which were consumed within an SEZ by a developer or a unit.

Now, with this new notification, the revenue department has shifted the exemption from the service provider to the developer, and extended the scope of tax exemption on services provided inside or outside an SEZ unit.

Service providers can claim any Cenvat credit on any input or services that are used in providing services at an SEZ.

Uday Pimprikar, partner at Ernst & Young, told DNA Money, "Now, the government should be efficient in granting refunds, wherever applicable, efficiently and should not defer granting it," he said.

R Muralidharan, executive director of indirect tax practices at PricewaterhouseCoopers, said, "The exemption through refunds creates an unnecessary delay, administrative and working capital issues."

Vivek Seal / DNA-Daily News & Analysis Source: 3D Syndication

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