"Services" to include

consultancy services related to installation

of computer hardware;

software implementation services;

data processing services;

database services; and

others.
 Service Provider" has been defined as a person providing
 Supply of a service from India to any other country.
 Supply of a service from India to the service consumer of any
other country in India.
 Supply of a service from India through commercial or physical
presence in the territory of any other country.
 Supply of a service in India relating to exports paid in free
foreign exchange or in Indian Rupees which are otherwise
considered as having being paid for in free foreign exchange by
RBI.
 Foreign Trade Policy 2004 - 2009: Under the
EPCG scheme, a service provider is permitted
to import capital goods including computer
software systems (for pre production,
production and post production) at 5 percent
basic customs duty subject to undertaking
exports (eight times duty saved on import of
capital goods) within a period of 8 years. Duty
is computed on assessable value of the goods
(c.i.f. value of the goods plus 1% handling
charges
 license holders discharging more than
75% of their export obligation
(including average export obligation) in
half or less than half the original export
obligation period would not be required
to discharge the balance export
obligation. However, a corresponding
amendment in the customs exemption
notification is awaited
 Service providers having total foreign exchange
earning of Rs 1 million and above in preceding or
current financial year eligible for duty credit
entitlement equivalent to 10 percent of foreign
exchange earned in preceding financial year which
can be used for import of capital goods including
spares, office equipment, office furniture and
consumables related to main line of business.
 These are special schemes under the
Foreign Trade Policy 2004 - 2009 to
encourage exports. Service providers/
manufacturers going under these
schemes have to meet certain export
obligations and maintain a positive net
foreign exchange earning (NFE
 Dutyfree import of goods, including
new and second hand capital goods
(without age limit) required for
approved activity either through sale,
lease or loan for approved activities by
EOUs and units operating in EPZ/ STP/
EHTP and SEZs
 However, it is not clear as to whether
such exemption would be available
to EOUs and units in STP/ EHTP on
CVD of 4%, which is applicable on
notified IT products
 Procurement of capital goods,
consumables from DTA without
payment of Cenvat (Excise duty
 Reimbursement of service tax paid on
services received from the DTA for EOU/
STP/ EHTP units. Exemption from
service tax on services procured from
DTA to SEZ units.
 Reimbursement of central sales tax paid
on interstate purchases from DTA
provided the goods are intended to be
used for eligible purposes for EOU/ STP/
EHTP units. SEZ units are entitled to
central sales tax exemption.
 Units in EOU/ STP/ EHTP units permitted to sell
goods/ services in DTA upto 50 percent of FOB
value of exports of previous year subject to
fulfillment of positive Net foreign exchange
earnings and at concessional duty rate (50
percent of the applicable custom duty). DTA
sales by SEZ units however not restricted to 50
percent of FOB value of exports.
 Procedural change intended at enabling BPOs
and ITES companies to obtain refund of of Central
Sales Tax (CST):
The FTP contemplated reimbursement of CST to
EOUs/ STPs on domestic purchases against
issuance of Form C. However, the service
providers were unable to fulfill the conditions for
issuance of Form C. Therefore, the
reimbursement was not possible in practice.
 The present procedural change in Appendix 14-I-
I seems to merely do away with the requirement
of submitting a specified certificate from a
Chartered Accountant in case of a BPO/ ITES
company
 DEPB benefits on supplies to SEZs
against Indian Rupees:
Suppliers of goods to SEZs receiving
the consideration in Indian Rupees
would also be eligible for DEPB benefit
scheme now, provided such payment is
made from the Foreign Currency
Account of the SEZ unit. Earlier, the
benefit was only against forex receipts