You can’t stop marvelling at the lack of speed in which the Indian Finance Ministry
operates. It has taken 5 Years, change of a finance minister, a global recession for
the finance ministry in India to start to “look” into this issue. About 5 years back
Mr.P.Chidambaram as then Finance Minister cancelled the exemption given to Exporters
from paying “Service Tax” on input services (which amounts at current rate @12.36%)
that were rendered towards manufacturing/rendering an item/service that will get exported
out of the country. The idea being you can only export a service/item not the tax
of the originating country with it and to prevent India from becoming non-competitive
compared to its neighbours. Instead of the exemption the Hon’ble minister announced
Exporters can claim a refund (which in India means pleasing the bureaucracy &
adding infinite delays) for the service tax they will pay, this the minister said
was to prevent leakages and misuse of the benefit. In India “Refunds” or for that
matter any policy announcements (other than the written law) are mere intentions and
are like “Poll” promises – they will always be kept as a promise by then finance
minister and his successors. Keeping up this tradition, there has been no
clear announcement
or notification on the procedure and the forms to be used for this refund claim.
For last several years at my company, we have asked every Service Tax & Excise
Tax official we have met for the procedure we need to follow to get the refund, every
one has said anything but a consistent answer.
Hence, I was surprised Today to see some movement on this with this article in Economic
Times Newspaper - “Faster
Service Tax refunds on cards”. With today’s budget turning out to be a disappointment
(it read more like UPA government poll propaganda) for Indian Inc. and Exporters in
particular at least if the FinMin can do this refund notification quickly, it will
give us some relief in these testing times.
Read the complete post at http://www.venkatarangan.com/blog/2009/02/16/Refund+Of+Service+Tax+Paid+By+Exporters+In+India.aspx