Tax Refund on Exports to be Quicker

Tax Refund on Exports to be Quicker

Exporters will now be able to get a quick refund of service tax built into exports. This would be done through a faster system based on ad hoc rate according to the new electronic service tax refund mechanism. Besides, exporters can also continue to get refunds through filing of refund claims for actual service tax on exports with supporting documents, as they have been doing till now.

This development has taken place after a notification was issued by the finance ministry recently. While presenting the 2011 budget, the ministry had promised exporters that it would make required administrative changes to enable the traders claim refunds faster and in a simpler way, on par with the duty drawback facility available for merchandise inputs in exports.

Presently, the taxes that are paid on goods are built into the cost of products exported and are given back electronically on ad hoc rates. The option of getting full refund of the actual amount is available by filing a refund application with supporting documents. However, this process is said to be more time consuming and prone to disputes. It has been mentioned by the ministry that the ad hoc service tax rates of each class of goods would be notified in due course of time.