Services exports from the country may get a fillip with the new Congress-led Government providing relief to certain service providers in terms of reduced transaction costs.
The Government has exempted service providers meeting specified criteria from furnishing bank guarantees to the Revenue Department for availing themselves of export promotion schemes such as export promotion capital goods (EPCG) scheme and advance licence scheme.
Already, the benefit of exemption from bank guarantees was available for physical exports in the case of exporters meeting specified criteria. Now, the facility is being extended to service exports.
Export turnover
Accordingly, exporters having an export turnover of Rs 5 crore in current or preceding financial year and having a good track record of three years of exports have been exempted from the bank guarantee requirement.
A similar benefit has been accorded to a service provider registered with the excise/service tax authority and paid a service tax of Rs 1 crore or more during the preceding financial year.
Also, certain agri export zone (AEZ) units have been accorded the benefit of reduced bank guarantee for availing themselves of the EPCG/Advance licence scheme.
Beneficiaries
Hotels, tour operators, business service providers, television broadcasters and even some software units (not part of STPI scheme) could gain from the latest move of the Government.
“The Finance Ministry’s move to exempt service providers from bank guarantees will reduce their transaction costs.
“It will benefit those who are not status holders, but import capital goods under EPCG/advance licence schemes,” Mr Ajay Sahai, Director-General, Federation of Indian Export Organisations (FIEO), told Business Line.
Services account for over 50 per cent of the country’s gross domestic product (GDP), which is estimated at about $1.2 trillion.
Commercial services
In 2007, India’s commercial service exports stood at $89.75 billion, higher than service imports of $77.2 billion.
The Finance Ministry move to remove the bank guarantee requirement for certain service providers comes on the heels of the Revenue Department providing service tax exemption on all services consumed by SEZ developer/ units within the special economic zones (SEZs).
The Government has exempted service providers meeting specified criteria from furnishing bank guarantees to the Revenue Department for availing themselves of export promotion schemes such as export promotion capital goods (EPCG) scheme and advance licence scheme.
Already, the benefit of exemption from bank guarantees was available for physical exports in the case of exporters meeting specified criteria. Now, the facility is being extended to service exports.
Export turnover
Accordingly, exporters having an export turnover of Rs 5 crore in current or preceding financial year and having a good track record of three years of exports have been exempted from the bank guarantee requirement.
A similar benefit has been accorded to a service provider registered with the excise/service tax authority and paid a service tax of Rs 1 crore or more during the preceding financial year.
Also, certain agri export zone (AEZ) units have been accorded the benefit of reduced bank guarantee for availing themselves of the EPCG/Advance licence scheme.
Beneficiaries
Hotels, tour operators, business service providers, television broadcasters and even some software units (not part of STPI scheme) could gain from the latest move of the Government.
“The Finance Ministry’s move to exempt service providers from bank guarantees will reduce their transaction costs.
“It will benefit those who are not status holders, but import capital goods under EPCG/advance licence schemes,” Mr Ajay Sahai, Director-General, Federation of Indian Export Organisations (FIEO), told Business Line.
Services account for over 50 per cent of the country’s gross domestic product (GDP), which is estimated at about $1.2 trillion.
Commercial services
In 2007, India’s commercial service exports stood at $89.75 billion, higher than service imports of $77.2 billion.
The Finance Ministry move to remove the bank guarantee requirement for certain service providers comes on the heels of the Revenue Department providing service tax exemption on all services consumed by SEZ developer/ units within the special economic zones (SEZs).
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