is their any notification regarding exemtion for services provided to EOU ??
Service tax queryy
mahima sharma (trainee) (116 Points)
10 April 2011
3 Replies
Ram Avtar Singh
(Nagari Sultanpur U.P.Delhi)
(14497 Points)
Replied 10 April 2011
Epces Circular No. 4/2007-08 Dated 19-4-2007 EXEMPTION FROM SERVICE TAX For all the exporters, including EOUs, issue of services tax was being highlighted, specifically the issue of service tax on the services rendered abroad like services of foreign buyers agents etc. Hon’ble Commerce & Industry Minister has made the following announcement:- Government has enunciated the principle that we should only export goods and not the taxes and duties thereon. In line with this, services rendered abroad and charged on exports from India would be exempted from Service Tax.
for more detail read with this link
https://www.eouindia.gov.in/epces_cieculars/EPC_CIR_0708-04.pdf
Ram Avtar Singh
(Nagari Sultanpur U.P.Delhi)
(14497 Points)
Replied 10 April 2011
EXPORT PROMOTION COUNCIL FOR EOUs & SEZ UNITS
(Ministry of Commerce & Industry, Government of India)
705, BHIKAJI CAMA BHAVAN, BHIKAJI CAMA PLACE, NEW DELHI 110 066
TEL : 26165805, 26167042, FAX: 26165538, EMAIL : epces @ vsnl.net
L.B.SINGHAL
DIRECTOR GENERAL
Epces Circular No. 4/2007-08 Dated 19-4-2007
Sub : Release of Annual Supplement of Foreign Trade Policy by Shri Kamal Nath, Hon’ble
Union Minister of Commerce & Industry, today
Shri Kamal Nath, Hon’ble Union Minister of Commerce & Industry has released annual supplement
of Foreign Trade Policy. In this supplement a number of issues which were raised in the open house
meetings of EPCES with Shri G. K. Pillai, Secretary Commerce, in Kolkata, Chennai etc., have been
resolved. Similarly some of the issues raised in EPCES Seminar on SEZs with Shri G. K. Pillai,
Secretary Commerce, in Delhi on 20-1-2007 have also been resolved in FTP. The details are given
as under:-
(I) 100% EOU SCHEME
In all the open houses organized with Shri G. K. Pillai, Secretary Commerce, EOUs had raised the
issue that benefit of Focus Product Scheme, Focus Market Scheme and Vishesh Krishi & Gram
Udyog Yojana Scheme should be extended to 100% EOUs. The benefits of these schemes have been
extended to the EOUs. The following changes have been carried out in the Foreign Trade Policy.
1. Vishesh Krishi & Gram Udyog Yojana
(i) Paragraph 3.8.2.1 of the Foreign Trade Policy
Exports made by EOUs / BTPs who do not avail direct tax benefits / exemption shall be
eligible, provided the same is not covered under Paragraph 3.8.2.2.
(ii) Products eligible for benefit under VKGUY are given in Appendix 37A of Handbook of
Procedures, Vol. I. In this Scheme following new items have been added:-
Coconut oil, soyabean oil, potato flakes, meals and flours, cardamom, food preparations
like soups, sauces, pasta etc and bakery products, artistic wooden furniture, herbal
extracts of forest products, malt and minor forest produce.
2. Focus Market Scheme
(i) Paragraph 3.9.2.1 of Foreign Trade Policy
Exports made by EOUs / EHTPs / BTPs who do not avail direct tax benefits /
exemption shall be eligible, provided the same is not covered under Paragraph 3.9.2.2.
(ii) At present, benefit of Focus Market Scheme is available to 8 markets in the Latin American
countries and 49 markets in the African countries as given in Appendix 37C of Handbook of
Procedures, Vol. I. The benefit of this Scheme has been extended to 16 new markets which
includes 10 from CIS Block. The names of these 16 countries are given as follows:-
CIS Block
1. Armenia
2. Azerbaijan
3. Belarus
4. Georgia
5. Moldova
6. Kazakhstan
7. Kygyz Republic
8. Tajikistan
9. Turkmenistan
10. Uzbekistan
6 other Markets
1. El Salvador
2. Dominican Republic
3. Guatemala
4. Trinidad and Tobago
5. Serbia and Montenegro
6. Uruguay
3. Focus Product Scheme
(i) Paragraph 3.10.2.1 of Foreign Trade Policy
Exports made by EOUs / EHTPs / BTPs who do not avail direct tax benefits /
exemption shall be eligible, provided the same is not covered under Paragraph 3.10.2.2.
(ii) Products covered under Focus Product Scheme are given in Appendix 37D of Handbook of
Procedures, Vol. I. However, following new products have been added under this Scheme
Mica and its variant
Barley
Oats
Soyabean
Cigar/Cheroots
Bovine fats
Copra etc
4. Definition of Manufacturing to be incorporated in the Income Tax Act
A number of EOUs had pointed out in almost all the open house organized by EPCES under the
chairmanship of Shri G. K. Pillai, Secretary Commerce, that EOUs are facing problems while
claiming income tax benefit under Section 10B of the Income Tax Act because a number of
instances were reported wherein income tax authorities had taken a view that activities carried out by
EOUs do not amount to manufacturing. This was because of the fact that there was no definition of
manufacturing in Section 10B of the IT Act and the income tax authorities were going by the judicial
pronouncements. Now it has been decided that definition of manufacturing shall be
incorporated in the IT Act. This would bring about a uniformity and certain amount of
certainty to the EOUs.
5. Interest on the delayed reimbursement of CST
Again in all the open houses, it has been pointed out that there was a delay in disbursement of CST
because of non availability of funds. Recently Ministry of Commerce has released more than Rs. 150
crore for settlement of all pending claims of CST. Now a provision has been incorporated as
follows:-
Paragraph 6.11(c)(i)
Interest on delay in refund of CST would be paid, as notified.
As announced by Hon’ble Commerce & Industry Minister in the Press Conference, this interest
would be paid w.e.f. 1-4-2006.
6. Supplies of accessories/hangers in DTA to be counted for NFE
After discontinuation of the facility under 6.9(b) in the last FTP, in the open house held in Chennai,
under the chairmanship of Shri G. K. Pillai, Secretary Commerce, this issue had been highlighted.
Now Paragraph 6.9(h) has been added wherein supplies of accessories/hangers etc in DTA would be
counted towards NFE.
Paragraph 6.9(h)
Supplies of accessories including tags, labels, printed bags, stickers, belts, buttons or
hangers to DTA Unit for export.
7. Exit from the EOU Scheme
The provisions relating to exit from EOU Scheme are given in Paragraph 6.18 of the FTP. A number
of problems in the exit procedure had been pointed out, specifically from the EOUs from Western
Region. In the light of this difficulty, faced the following provisions have been incorporated in
Paragraph 6.18:-
(i) In Paragraph 6.18(e), at the end of the paragraph, the following sentence has been added:-
Since the duty calculations and dues are disputed and take a long time, a BG / Bond /
Installment processes backed by BG shall be provided for expediting the exit process.
(ii) A new Paragraph 6.18(g) has been added as follows:-
An EOU / EHTP / STP / BTP Unit may also be permitted by Development
Commissioner to exit under Advance Authorization as a one time option. This will be
subject to fulfillment of positive NFE criteria.
As you are aware that at present debonding under EPCG Scheme was allowed but on the raw
material, to be taken out, the duty had to be paid. Now the capital goods can be taken out under
EPCG Scheme and raw material can be debonded under Advance Authorization Scheme.
(II) SPECIAL ECONOMIC ZONE SCHEME
EPCES had organized a Seminar with Shri G. K. Pillai, Secretary Commerce in Delhi on 20-1-2007.
On a number of issues discussed in the seminar, amendments have been already been carried in the
SEZ Rules and these have been circulated vide EPCES Circular No. 40 dated 21-3-2007. A number
of other issues were pertaining to FTP. In the FTP, the following changes have been carried out:-
1. Definition of Developers to include Co-developer
Paragraph 9.18 of the FTP gives the definition of developer. Now this definition has been amended
to state that the definition of developer includes the co-developer.
2. Inter unit transfer of manufactured goods from EOU to SEZ units/SEZ Developer
Paragraph 6.13(a) permits transfer of manufactured goods from one EOU to another EOU. Now in
Paragraph 6.13(a), a sentence has been added as follows:-
Transfer of manufactured goods shall also be allowed from EOU / EHTP / STP / BTP
unit to a SEZ Developer or Unit following procedure prescribed in SEZ Rules, 2006.
3. Benefit of Advance Authorization Scheme for supplies to SEZ units/SEZ developers/
Co-developer
Paragraph 4.1.6 of the FTP provides the facility of advance authorization for physical exports and
for supplies to SEZ units. Now this facility has been extended for supplies to Developer/Codeveloper.
First paragraph of 4.1.6 reads as follows:-
Advance Authorisations necessitate exports with a positive value addition. Exports to
SEZ Units / supplies to Developers / Codevelopers, irrespective of currency of
realization, would also cover.
4. Facility of Duty Entitlement Pass Book Scheme for supplies to SEZ Units/SEZ
Developer
Paragraph 4.3.1 of the FTP provides the facility of DEPB for physical exports and for supplies to
SEZ units. Now the facility has been extended to SEZ developer as well. First paragraph of 4.3.1 of
the FTP reads as follows:-
An exporter may apply for credit, at specified percentage of FOB value of exports,
made in freely convertible currency or payment made from foreign currency account of
SEZ unit / SEZ Developer in case of supply by DTA.
III EXEMPTION FROM SERVICE TAX
For all the exporters, including EOUs, issue of services tax was being highlighted, specifically the
issue of service tax on the services rendered abroad like services of foreign buyers agents etc.
Hon’ble Commerce & Industry Minister has made the following announcement:-
Government has enunciated the principle that we should only export goods and not the
taxes and duties thereon. In line with this, services rendered abroad and charged on
exports from India would be exempted from Service Tax.
IV STATUS CATEGORY (Paragraph 3.5.2 of FTP)
The categorization of export houses has been renamed and the criteria also have been reworked out.
The existing criteria and the revised criteria are as follows:-
Existing Criteria Revised Criteria
Category Performance
(Rupees in
Crores)
Status Category Export
Performance
FOB / FOR
Value
(Rupees in
Crores)
One Star Export House
Two Star Export House
Three Star Export House
Four Star Export House
Five Star Export House
15
100
500
1500
5000
Export House (EH)
Star Export House (SEH)
Trading House (TH)
Star Trading House (STH)
Premier Trading House
(PTH)
20
100
500
2500
10000
As per paragraph 3.5.1, 100% EOUs and units located in SEZs are also entitled to apply and get the
above stated status.
As already informed vide our communication dated 4-4-07 and again on 17-4-2007, EPCES is
organizing an open house with Shri G. K. Pillai, Secretary Commerce in Ludhiana on 4-5-
2007. Hence if there are any issue relating to EOU/SEZ Scheme, these may please be sent
immediately, latest by 21/4/2007 so that we could include these in the Agenda Papers.
This is for your information please.
______________________________
Ram Avtar Singh
(Nagari Sultanpur U.P.Delhi)
(14497 Points)
Replied 10 April 2011
for more detail read bu this link
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