The government may exempt exporters from paying taxes on services utilised for export purposes and allow them to file an annual service tax return on the exemption enjoyed. The idea is not only to ensure that exporters’ cash does not stay locked with the government for an indefinite period , but also to save them the hassle of going through paperwork every time they want to claim an exemption, a commerce department official told ET.

Though, the finance ministry has made several attempts to simplify procedures related with refund of service tax paid on input services used in exports , the process still remains cumbersome with tens of crores locked in refunds , according to export body FIEO.

At a time when the industry is reeling under the impact of slackening demand in key export destinations such as the US and European Union and delayed payments, a cumbersome tax refund procedure only enhances their suffering.

The finance ministry, currently , allows exporters to get refunds for about 20 services including banking and other financial services, port services, transport of goods by road and railways, general insurance, storage and warehousing, business exhibition services and specialised cleaning services.