Refund of service tax paid on foreign agent commission by exporters - CBEC Clarifies
THE CBEC has clarified that:
Notification 18/2009 dated 07/07/2009 (in the table, sl.no.2 , condition no. 2) says “exemption shall be limited to one percent of the free on board value of export goods for which the said service has been used”. This means that amount of service tax paid, which can be refunded to the exporter, is restricted to one percent of the FOB value of export goods in relation to which the taxable service of the foreign agent was used.
The current rate of service tax being ten per cent and the maximum allowable limit of foreign agency commission being ten percent of FOB, one percent of the FOB value of export goods is the maximum exemption of service tax. To settle all doubts to rest, for the purpose of service tax refund, maximum allowable foreign agency commission on export goods continues to be at the pre-budget level of ten percent of the fob value of export goods till further changes are notified.
This Circular is dated 23.11.2009 – are you surprised that we are carrying it after a month? The Board chose to make this public only yesterday. Where was this Circular hiding for a whole month? And interestingly this Circular numbered 118/2009 was released after the Circular No.119/2009 [the CHA one] was released. Maybe they are so much in love with their circulars that they don't like to leave them for the public!
CBEC Circular No. 118/12/2009-ST Dated: November 23, 2009