Export Services Not To Be Taxed

The finance ministry today said that the export of services would be outside the ambit of the service tax, which is a destination-based consumption tax.

The ministry said secondary service providers would have to pay service tax, even if their services were used partially or completely for export by primary service providers. It has also said services consumed in India for manufacture of goods meant for exports would attract service tax.

On the issue of whether payments for services received after March 1, 2003, would attract a 5 per cent or 8 per cent rate, the ministry said that the new rates would be applicable only after the passage of the Finance Bill, 2003.

The rates would remain at 5 per cent if the billing was done prior to the date of the passage of the Finance Bill, even if the payment was received later.