Service Tax Exempt on Foreign Commission

[RAM SHARMA]

Dear Experts,We want to avail service tax exemption under notification no. 18/2009 dt. 7th july 2009 amended notification no. 42/2012 dt. 29th june 2012. I am little confuse in one condition which is mention both the notification is given below :-

         1)The exemption shall be limited to one percent of the free on board value of export goods for which the said service has been used.(As per not. 18/2009)

        2)The exemption shall be limited to the service tax calculated on a value of ten percent of the free on board value of export goods for which the said service has been used. (As per not. 42/2012)

Please interpret above two condition with example.

Thanks & Regards

AI Summary

Service tax exemption on foreign commission - limited to lower of actual tax paid or tax on capped FOB value.
Exemption for service tax on commission to foreign agents is limited: claimants must show commission on the shipping bill, and the exempt amount is the lower of service tax on actual commission paid and service tax computed on a capped fraction of the FOB value of exported goods; full exemption requires commission not to exceed that capped FOB proportion. The later notification replaces the earlier percentage of FOB formulation, and there is an outstanding issue whether place of provision changes for intermediary services remove such commissions from the service tax net.