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December 21, 2008
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     Sec. 94(f) of Finance Act, 1994 gives powers to the Central Government to make provisions for determining export of taxable services by notification in the official gazette.   Sec. 93 of Finance Act, 1994 gives power to exempt any taxable service or any specified description generally or subject to such conditions as may be specified in the notification from the whole or any part of the service tax leviable thereon.

     The Central Government by virtue of power conferred by Sections 93 and 94 of the Finance Act, 1994 the Central Government made the 'Export of Service Rules, 2005' ('Rules' for short).   The Rules came into effect from 15th March, 2005.   After this the rules were amended vide Notification No. 9/2005-ST, dated 03.03.2005, Notification No. 28/2005-ST, dated 07.06.2005, Notification No. 13/2006-ST, dated 19.04.2006, Notification No. 2/2007-ST, dated 01.03.2007, Notification No. 30/2007-ST, dated 22.05.2007, Notification No. 5/2008-ST, dated 01.03.2008 and Notification No. 20/2008-ST, dated 10.05.2008.

     The Rules contain only five rules.  There is no definition for export of service under the Rules.   Rule 3 gives different categories of services which may be treated as export of services subject to conditions.  Rule 3(1) gives the details of services that may be treated as export of services and Rule 3(2) gives the conditions for the treatment of a service as export of service.


     Rule 3(1)(i) provides that the following are the export of taxable services provided in relation to an immoveable property situated outside India as contained in Sec. 65(105) of the Finance Act, 1994:

  • Sec.65(105)(d)- general insurance business;
  • Sec. 65(105)(p) - architect service;
  • Sec.65(105)(q) - interior decorator service;
  • Sec.65(105)(v) - real estate;
  • Sec.65(105)(zzq) - commercial or industrial construction service;
  • Sec.65(105)(zzza) - site formation and clearance, excavation and earthmoving and demolition and such other similar activities;
  • Sec.65(105)(zzzb) - dredging;
  • Sec.65(105)(zzzc) - survey and map making;
  • Sec.65(105)(zzzh) - construction of complex;
  • Sec.65(105)(zzzr) - auction of property in any manner but does not include auction under directions or orders of a court of law or auction by the Government;
  • Sec.65(105)(zzzy) - mining of mineral or gas;
  • Sec.65(105)(zzzz) -  renting of immoveable property for use in the course or furtherance of business or commerce;
  • Sec.65 (105)(zzzza) - execution of works contract.

    Rule 3(1)(ii) provides that the following are the export of taxable services provided in relation to services performed outside India as contained in Sec. 65(105) of the Finance Act, 1994:

  • Sec. 65(105)(a) - stock  broker;
  • Sec. 65(105)(f) -  courier service;
  • Sec. 65(105)(h) - customs house agents;
  • Sec .65(105)(i) - streamer agent;
  • Sec. 65(105(j) - clearing and forwarding agent;
  • Sec. 65(105)(l) -air travel agent;
  • Sec. 65(105)(m) - mandap keeper;
  • Sec. 65(105)(n) - tour operator;
  • Sec. 65(105)(o) - rent-a-cab scheme;
  • Sec. 65(105)(s) - practicing Chartered Accountant;
  • Sec. 65 (105)(t) - practicing Cost Accountant;
  • Sec. 65 (105)(u) - practicing Company Secretary;
  • Sec. 65(105)(w) - security agency;
  • Sec. 65(105)(x) - credit rating agency;
  • Sec. 65(105)(y) - market research agency;
  • Sec. 65(105)(z) -  underwriter;
  • Sec. 65(105)(zb) - photography;
  • Sec. 65(105)(zc) -holding a convention;
  • Sec. 65(105)(zi) -video production agency;
  • Sec. 65(105)(zj) - sound recording studio or agency;
  • Sec. 65(105)(zn) -port services;
  • Sec. 65(105)(zo) -authorized service station;
  • Sec. 65(105)(zq)-beauty parlor;
  • Sec. 65(105)(zr) - cargo holding agency;
  • Sec. 65(105)(zt) - dry cleaner;
  • Sec. 65(105)(zu) -event manager;
  • Sec. 65(105)(zv) - fashion designer;
  • Sec. 65(105)(zw) - health club and fitness centre;
  • Sec. 65(105)(zza) - warehouse keeper;
  • Sec. 65(105)(zzc) -  commercial training or coaching centre;
  • Sec. 65(105)(zzd) -commissioning and installation;
  • Sec. 65(105)(zzf) - internet cafe;
  • Sec. 65(105)(zzg) - management, maintenance or repair;
  • Sec. 65(105)(zzh) -technical testing and analyzing;
  • Sec. 65(105)(zzi) - technical inspection and certification;
  • Sec. 65(105)(zzl) -port  services in any manner;
  • Sec. 65(105)(zzm) -airports service;
  • Sec. 65(105)(zzn) -aircraft operator;
  • Sec. 65(105)(zzo) -business exhibition;
  • Sec. 65(105)(zzp) -goods transport agency;
  • Sec. 65(105)(zzs) - opinion poll agency;
  • Sec. 65(105)(zzt) -outdoor caterer;
  • Sec. 65(105)(zzv) -survey and exploration of mineral;
  • Sec. 65(105)(zzw) -pandal or shamiana contractor;
  • Sec. 65(105)(zzx) -travel agency;
  • Sec. 65(105)(zzy) -forward contract;
  • Sec. 65(105)(zzzd) -cleaning activity;
  • Sec. 65(105)(zzze) -club or association;
  • Sec. 65(105)(zzzf) - packaging activity;
  • Sec. 65(105)(zzzp) -transport of goods in containers by rail by person other than Government;
  • Sec. 65(105)(zzzzg) - stock exchange;
  • Sec. 65(105)(zzzzh) -trading, clearing and settlement of transactions in goods or forward contracts;
  • Sec. 65(105) (zzzzl) - processing and clearing house service.

    If any of the above service is partly performed outside India, it shall be treated as performed outside India.   Where the taxable services of management, maintenance and repair under Sec.65 (105)(zzg),  technical testing and analysis under Sec. 65 (105) (zzh) and  technical inspection and certification under Sec. 65 (105)(zzi)  are provided in relation to any goods or material of any immoveable property, as the case may be situated outside India at the time of provision of service, through internet or electronic network, including a computer network or any other means, then such taxable service, whether or not performed outside India shall be treated as the taxable service performed outside India.

         Rule 3(1)(iii) provides that  export of taxable services shall, in relation  to taxable services specified in Sec. 65(105) of the Act but excluding-

  • Sec. 65(105) (zzzo) - by an aircraft operator in relation to scheduled or non scheduled air transport of such passenger embarking in India for international journey in any class other than economy class;
  • Sec. 65 (105)(zzzv) -  in relation to transport of such person embarking from any port or other port in India, by a cruise ship;
  • Those specified in Rule 3(1)(i) except the following when the said taxable service does not relate to immoveable property:
  • Sec. 65(105)(d) - general insurance business;
  • Sec. 65(105)(zzzc) - survey and map making;
  • Sec. 65 (105)(zzzr) - auction of property in any manner but does not include auction under directions or orders of a court of law or auction by the Government;
  • Those specified in Rule 3(1)(ii) when provided in relation to business or commerce, be provision of such services to a recipient located outside India and when provided otherwise, be provision of such services to a recipient located outside India at the time of provision of such service.

    Where such recipient has commercial establishment or any office relating thereto, in India, such taxable services provided shall be treated as export of service only when order for provision of such service is made from any of his commercial establishment or office located outside India.

         Where the taxable service under Sec. 65 (105)(zzzzj) provided or to be provided to a recipient located outside India in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances, then such taxable service shall be treated as export of taxable service subject to the condition that the tangible goods supplied for use are located outside India during the period of use of such tangible goods by recipient.


         Rule 3(2) provides the following conditions to treat the taxable service as specified in Rule 3(1) as export of service:

  • Such service is provided from India and used outside India; and
  • Payment for such service is received by the service provider in convertible foreign exchange.

    The explanation to this Rule explained that the term 'India' includes the designated areas in Continental Shelf and Exclusive Economic Zone of India as declared by the notifications of the Government of India in Ministry of External Affairs numbers S.O. 429(E), dated 18.07.1986 and S.O. 643(E), dated 19.09.1996.


         Rule 4 provides that any service which is taxable under Sec. 65(105) of the Act may be export without payment of service tax.


         Rule 5 provides that where any taxable service is exported, the Central Government may, by notification, grant rebate of service tax paid on such taxable service or service tax or duty paid on input services or inputs, as the case may be, used in providing such taxable service and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification.


    By: Mr.áM. GOVINDARAJAN - December 21, 2008


    Discussions to this article


    Dear Sir,

    Can you provide the list of services of  Export of service Rule 2005 as amended by Budget 2011

    By: Mitesh Patel
    Dated: 21/03/2011


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