The Indian government has announced refunds on taxes paid by exporters on various services, including costs of letters of credit (L/Cs), custom house agent service and commission agent service.

The services tax refunds are the latest move in a series of steps taken by the government to help exporters counter the negative impacts of a fast appreciating rupee.

Eligible services

Exporters will benefit from service tax refunds on account of services provided in relation to export L/Cs, such as advising commission, advising amendment and confirmation charges.

The service tax paid on account of banking and other financial services in relation to the collection of export bills and L/Cs will also be refunded to exporters, a Central Board of Excise and Customs (CBEC) statement said.

Currency woes

The rupee is hardening against a weakening US dollar. Recently it has been trading at under 40 rupees (Rs40) to the US dollar while a year ago it was trading at Rs44 to the US dollar.

The refund of service tax paid by exporters on L/Cs is one of a total of 16 refunds on taxable services used by Indian exporters, including the service tax on commission to foreign agents which forms a major part of the tax paid by exporters.

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