Save Rs 499. Go Ad-Free with CAclubindia Pro for 2 Full Years. Subscribe Now!

Service tax exemption on exports for eou if exports are set

Service Tax (Legacy) 1074 views 3 replies

saikiran

96 Points Posted on 02 April 2012

Dear all,

Its very urgent, please reply on this issue... A software company, which is a 100% EOU, claims exeption for service tax on exports. This company exports to a another company in united states and from the same company it imports some software. As per the Exports of services rules, service tax exemption on exports can be claimed only if convertible foreign exchange is received. If the company set off exports against imports and no foreign exchange is received can still service tax is exempted? Please reply.... Please provide section, rule, notification in this regard if any...

Thanks in advance

Replies (3)

Devendra

Chartered Accountant

4780 Points Posted on 03 April 2012

You can suggest the client to receive foreign currency against the Export Sales instead of setting of the same with the Imports made by them.

There is no specific section / rule for the situation mentioned in your query.

Regards,

Devendra Kulkarni

saikiran

96 Points Posted on 03 April 2012

Dear Devendra,

There is a specific agreement in this regard and client cannot violate on this and client has even intimated about this set off to Authorised dealer - I as required by RBI.