Special Economic Zone developers now will no longer have to go through the process of claiming refunds on service tax paid on services consumed within the tax free enclaves.

However, the services provided by entities outside the zone to units in SEZ will continue to attract 10 per cent service tax even as they will be entitled to claim refund later.

"The exemption claimed by the developer or units of SEZ shall be provided by way of refund of service tax paid on the specified services used in relation to the authorised operations in the SEZ except for services consumed wholly within the SEZ," the government said in a notification.

Further, the Central Board of Excise and Customs (CBEC) said the developer or unit of an SEZ will maintain proper account of receipt and utilisation of the taxable services for which exemption is claimed.

On March 3, the government had directed payment of service tax on all services allowing exemption by way of refund, the Export Promotion Council on EoUs and SEZs Director General L B Singhal said.

"However, now the services consumed within the SEZ will not attract service tax," he said.