The government has exempted units in Special Economic Zones (SEZs) from paying service tax on services they avail of from within the zone.
However, service tax on services availed outside the
SEZ continue to apply and taxes will have to be paid according to the Indian tax laws.
L B Singhal, Director General of Export Promotion Council on Export Oriented Units (EOUs) and SEZs, said that though it was a correct step in the right direction yet it would have been better if service taxes were exempted even outside the SEZs.
India, so far has approved the creation of 568 SEZs out of which 315 have been notified, which means units functioning in them are eligible for tax and other benefits. Meanwhile, merchandise exports from SEZs have already increased from Rs66, 638 crore in 2007-08 to Rs90, 416 crore in 2008-09, accounting for a growth of 36%.
Source : iitrade.ac.in