Shipping ind exempted from service tax net

In a significant development, government has decided to exempt nine services availed abroad by Indian shipping industry from the service tax net from June 16.

"The Central Board of Excise and Customs (CBEC) has exempted nine different services availed by domestic shipping companies at ports outside India from service tax net. However, the services of taking P&I Insurance cover and other services still continue to attract service tax," a senior official from Indian National Shipowners' Association (INSA) said today.

He said the services exempted from tax net include cargo handling, clearing and forwarding, custom house agency services, maintainence and repairs, port services, stevedoring, storage and warehousing, technical inspection & certification and steamer agency services.

These exemptions would only apply in such cases where taxable services are provided when handling of ships at a port outside India or storage of goods carried in a ship at a foreign port, he said.

"This service tax provision was actually nullifying the tonnage tax benefits given to Indian shipping industry. Now, an Indian ship need not pay service tax at 10.2% for these nine services availed abroad," he said.

However, the services including availing P&I cover, deploying foreign personnel, surveys and exploration services still continue to attract service tax.