Monday, April 27, 2009

Election Commission Obstructs Service Tax Sops For Units - April 27, 2009

The Election Commission (EC) obstructs service tax sops for SEZ units. Now, developers of special economic zones (SEZ) and units operating in them will have to wait until a new government is formed for exemption on service tax payments for services availed inside the zones.

EC is not ready to permit the finance ministry to pass a notification allowing the exemption while elections are on because it could result in direct benefits to a section of the electorate, a government official has said. It will be the new elected government which will bring out the notification, the official said.

Consequently, these units will have to pay the service tax and claim refunds, until the elections are over.

Initially, SEZ units and developers had been allowed exemption on service tax on services availed within the boundaries of the zone, but were made to pay tax on services enjoyed outside the zone.

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