Service tax notification nr. 18/2009 - exemption of services

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santosh reddy vancha (Querist)
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24 July 2009
exempts the taxable service received by an exporter of goods (hereinafter referred to as the exporter) and used for export of goods (hereinafter referred to as the said goods), of the descriptttion specified in column (3) of the Table below (hereinafter referred to as the specified service), pertaining to sub-clauses of clause (105) of section 65 of the said Act specified in the corresponding entry in column (2) of the said Table, from the whole of the service tax leviable thereon under section 66 and section 66A of the said Act, subject to the conditions specified in column (4) said Table, namely:-

2 zzb) Service provided by a commission agent located outside India and engaged under a contract or agreement or any other document by the exporter in India, to act on behalf of the exporter, to cause sale of goods exported by him.

The exemption shall be limited to one per cent of the free on board value of export goods for which the said service hasbeen used.

The above notification is not clear to interprete, say when 3% commission is paid, whether we can claim exemption on 1% and pay service tax on balance 2% .

Vishnu Saboo

Vishnu Saboo (Expert)
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25 July 2009 yes, it is really confusing language.
As per language if you are paying the commission upto 1% of FOB is exempt from the service tax above this rate is to be diposited and can claim for refund.