India's Election Commission (EC) ordered to postpone the implementation of the much awaited service tax exemptions till a new government takes over at the centre, reported the Economic Times. The special economic zones and units operating in them have to wait now to get exemption on service tax payments for services inside the zones.

A government official reportedly said that EC denied permitting the Finance Ministry to pass a notification, as it would result in direct benefit to a section of electorate when general elections are going on.

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. However, the finance ministry decided to permit SEZs to claim refunds on services like banking, courier and port handling availed outside the zones following representations from industry.

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