EXEMPTION ON INPUT SERVICES TO EXPORTERS

[Dr. Sanjiv Agarwal]

 

Exemption to input service received by exporter of goods and used for export of goods is allowed w.e.f. 1.7.2012.

Vide Notification No 42/2012-ST dated 29.6.2012, exemption w.e.f. 1.7.2012 has been provided to taxable services received by an exporter of goods and used for export of goods subject to conditions and extent provided in the notification.

What is exempt under this notification is the services 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.

Conditions for Exemptions

The exemption shall be subject to the following conditions –

(1)       The exporter shall declare the amount of commission paid or payable to the commission agent in the shipping bill or bill of export, as the case may be.

(2)       The exemption shall be limited to the service tax calculated on a value of ten per cent of the free on board value of export goods for which the said service has been used.

(3)       The exemption shall not be available on the export of canalized item, project export, or export financed under lines of credit extended by the Government of India or EXIM Bank, or export made by Indian partner in a company with equity participation in an overseas joint venture or wholly owned subsidiary.

(4)       The exporter shall submit with the half-yearly return after certification of the same as specified -

(i)         the original documents showing actual payment of commission to the commission agent; and

(ii)        a copy of the agreement or contract entered into between the commission agent located outside India and the exporter in relation to sale of export goods outside India:

 Eligible Exporters

The following exporters shall be eligible who -

(i)  informs the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the factory or the regional office or the head office, as the case may be, in Form EXP3 appended to this notification, before availing the said exemption;

(ii)  is registered with an export promotion council sponsored by the Ministry of Commerce or the Ministry of Textiles, as the case may be;

(iii)  is a holder of Import-Export Code Number;

(iv)  is registered under section 69 of the said Act;

(v)   is liable to pay service tax under sub-section (2) of section 68 of read with Rule 2(1) (d) (i) (G) i.e. in relation to any taxable service provided or agreed to be provided by any person which is located in a non – taxable territory and received by any person located in the taxable territory, the recipient of such service. taxmanagementindia.com

Other Requirements

The exporter claiming exemption shall also ensure that –

i)     bill is issued in the name of the exporter.

ii)    six monthly return in Form EXP 4 is filed within 15 days of end of six months.

iii)   return shall be accompanied by certified copies of documents.

iv)   exporter's certification to the effect that specified services to which documents pertain have been received and used for export of goods and mention the related shipping bill number.

v)    in case of individual / proprietorship firm / HUF, documents should be certified by the exporter himself. In other cases, documents shall be certified by person authorized by the Board or any other competent person.

vi)   where the commission charged exceeds ten percent of FOB value of the export, then Service Tax should be paid within the specified period under Rule 6 of Service Tax Rules 1994 on such amount as is on excess of ten percent.

For Form EXP 3 and EXP 4, refer text of Notification.

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