Exemption of service tax

[Guest]

Dear Sir, We wish to start designing garments which is covered under 'Fashion Designing' we would be making patterns , concetulise designs and sending them to customers outside India. Payment will be received in Convertiable Foreign Currency. No part of desigining will be performed outside India. Now my query is whether we will get Exemption of Service Tax? Please advice. Regards

[Guest]

Service rendered by you fall under the category of 'Fashion designing service' (Sec.65(105)(zv) of Finance Act). Under Export of service Rules, 2005, the service is covered under Rule 3(1)(ii)and will be in the nature of 'export' only if the service is performed outside India, either partly or fully. As no part of the activity is performed outside India in your case, the same will not qualify for exemption as export of service.

[Madhukar N Hiregange]

As per the present law you would notbe able to get the benefit of export of services. The conditions for your catgeory is: part of the service has to be provided outside India, other servcies can be provided from India + it should be used outside India ( not an issue) + consideration should be in CFE

AI Summary

Export of services exemption denied where service wholly performed in India; foreign payment alone insufficient for exemption. Qualification for service tax exemption as an exported fashion design service depends on the place of performance: the service must be performed outside India, wholly or partly. Payment in convertible foreign exchange and use of the output abroad do not satisfy the export performance requirement. If all design work is performed within India and no part is performed abroad, the service will not qualify as an export for exemption purposes.