The Revenue Department on Tuesday said special economic zone (SEZ) developers and units will not be required to pay tax on certain services for which they had to seek refund.
“Where the specified services received by the SEZ unit or the developer are used exclusively for the authorised operations, the person liable to pay service tax has the option not to pay the service tax ab initio”, subject to certain condition and procedure, the Central Board of Excise and Customs (CBEC) said in a circular.
The SEZs have been exempted from service tax. However, the developers and unit owners have to first pay the tax and then claim refund.
Approval Committee of SEZs will specify such services.
“The SEZ unit or the developer shall get an approval by the Approval Committee of the list of the services as are required for the authorised operations on which the SEZ unit or developer wish to claim exemption from service tax,” CBEC said.
It also said the government had decided to exempt the services on which service tax was leviable (under Section 66B of the said SEZ Act), received by a SEZ unit or developer and used for the authorised operation from the whole of the service tax, education cess, and secondary and higher education cess.
“The exemption shall be provided by way of refund of service tax paid on the specified services received by the SEZ unit or the developer and used for the authorised operations,” it added.
The norms have been issued at a time when SEZs are loosing sheen after the government decided to impose minimum alternate tax (MAT) and dividend distribution tax (DDT) on such economic enclaves.
In the past two years, a large number of developers have either withdrawn SEZ plans or have sought more time from the Commerce Ministry to complete their zones.