New Delhi: The government on Tuesday allowed refunds on tax paid by exporters on three more services, including commission paid to foreign agents, that will allow them to offset damage caused by a costly rupee.
With this, exporters will now receive refunds of taxes paid on 16 services.
The three services on which tax refunds would be available include are custom house agent service, banking and other financial services, commission agent service provided by an agent located outside India.
Refund of taxes paid on commission to foreign agents has been a long standing demand of exporters, especially from the pharma and textile sectors. They pay about 10%-15 commission to agents in foreign markets. This results in a burden of around 1.8% of the export value.
Commerce Minister Kamal Nath had announced a refund of service tax for exporters in last year’s annual supplement to the foreign trade policy.
In September last year, the Finance Ministry made the first-ever move to refund service tax paid by exporters on non-input services like those offered by ports and goods transport agency.
In February this year, the Finance Ministry had extended the service tax refund scheme for exporters to three more taxable services, taking the total number to 13.
The rupee had appreciated by more than 8% against the US dollar during 2007-08, hitting the exporters hard, though of late it had started falling.