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TMI BlogWhether Exemption from Service Tax on Commission Income on reverse charge method granted by way of notification is contradictory with the announcements in the BudgetX X X X Extracts X X X X X X X X Extracts X X X X ..... Whether Exemption from Service Tax on Commission Income on reverse charge method granted by way of notification is contradictory with the announcements in the Budget - Commentaries / Editorials Dated:- 9-7-2009 - News - In hisBudget Speech Mr. FM has said: 1 Services received by exporters from goods transport agents and commission agents, where the liability to pay service tax is ab init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... io on the exporter, would be exempted from service tax. Thus, there would be no need for the exporter to first pay the tax and later claim refund. [ See Para No. 130 of Speech ] Extracts from Explanatory Notes: 2 Under notification No.18/2009-ST dated 07.07.2009, two taxable services, namely, `transport of goods by road' and `commission paid to foreign agents' have been exempted from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e levy of service tax, if the exporter is liable to pay service tax on reverse charge basis. The present cap of 10% on commission agency charges has been retained, and the exporter will have to pay service tax on the amount of commission which is in excess of 10%. [ See Sub-Para (a) of Para (iv) of Part C of the Notes ] Extracts from New Notification: 3 The exemption shall be limited to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one per cent of the free on board value of export goods for which the said service has been used. [ See Para (2) of Entry in Column no. 4 against Sr. No. 2 of the Table of the Notification no. 18/2009 ] [ New Notification ] Extracts from Old Notification: 4 Refund of service tax shall be restricted to actual amount of service tax paid or service tax calculated on ten per cent of FOB valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of export goods, whichever is less. [ See Para (iv) of Entry in column No. 4 against Sr. No. 15 of the Table of the Notification No. 41/2007 ] [ Superseded Notification as amended ] From the above analysis it is clear that some where is a mistake. The intention of the legislatures is to keep the exemption limit equal to 10% of the FOB value in case of commission paid to foreign commission age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, but notification limits this exemption upto to 1% only. This mistake may be inadvertent but serious in nature. A suitable corrigendum is required without loss of time. - News - Press release - PIB Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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