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SEZ creates differences between Ministries

Gaurav Choudhury  New Delhi, May 12, 2007
First Published: 04:44 IST(12/5/2007) | Last Updated: 05:08 IST(12/5/2007)

It is not the first time. Reports of 'differences' between the Finance and Commerce Ministries keep doing the rounds, notably over the Special Economic Zone related policies, and more recently over the exemption in service tax being granted to exports. On Friday, the finance ministry took recourse to an official statement to clarify that there were no differences of opinion between the two ministries on the matter.


In the annual supplement to the foreign trade policy released on April 19, Commerce Minister Kamal Nath had announced that exports were exempt from service tax. This meant an estimated revenue loss of Rs. 600 crore, and there were suggestions that the finance ministry was far from pleased.

“On the issue concerning rebate or refund of service tax paid on various input services used for goods or services exported, it is hereby clarified that there are no differences between the Finance and Commerce Ministries,” said a finance ministry statement on Friday.

It also noted that taxes paid on inputs or input services used for manufacture of export goods, or for providing export services, were already being neutralised under rebate, refund and drawback schemes.

Modalities for the refund or rebate on service tax in certain services, which are not inputs, but are related to goods or services exported from India, and to neutralise service tax on services received and rendered abroad are being worked out in consultation with the department of commerce, it added.

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