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April 01, 2008 10:46 IST
An additional set of three services used by exporters are likely to be made eligible for exemption from service tax.
Sources in the know said the service tax paid by exporters on commissions paid to foreign agents was likely to be exempted. Foreign agents are responsible for getting orders from prospective clients based abroad.
A notification on the additional service tax exemption may be released on Tuesday.
The move is likely to benefit all exporters, especially from textiles and pharmaceutical sectors. Exporters said the service tax on commission to foreign agents formed a major chunk of the tax paid by them.
The finance ministry made 13 services eligible for service tax refund in three announcements last year (July, October and November) as well as in February this year. These include service tax on port, general insurance, storage and warehousing services, courier services and business exhibition services.
Commerce Minister Kamal Nath had announced exemption of service tax for exporters while releasing the annual supplement to the trade policy in April 2007.
However, there are at least 14 services used by exporters that are yet to be exempted from service tax.
The relaxation on service tax, which constitute up to 5 per cent of the Freight On Board value of export consignments, is aimed at cushioning losses of exporters, who have been hit hard by the recent appreciation of the rupee.
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