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Clarification on service tax on inward remittance

Sumit Grover (Chartered Accountant ) (3647 Points)

14 October 2014  

Vide Circular 180/06/2014 – ST, dated 14th Oct'14, following issues have been clarified by CBEC:

1) No service tax is payable on foreign currency remitted to India from overseas.

2) Services provided by agent or the representation service provided by an Indian entity/ bank to a foreign money transfer service operator (MTSO) in relation to money transfer falls in the category of intermediary service, therefore the same shall be subject to service tax.

3) Sub-agents all under the category of intermediary services as well.

4) Service tax would apply on the services provided by way of currency conversion by a bank /entity located in India (in the taxable territory) to the recipient of remittance in India

5) Amount charged separately, if any, by the Indian bank/entity/agent/sub-agent from the person who receives remittance in the taxable territory, for the service provided by such Indian bank/entity/agent/sub-agent, also falls in the ambit of service tax.

The aforesaid circular may be accessed from the link hereinbelow:


 3 Replies

@VaibhavJ (Believe!! Live your dreams!)   (33496 Points)
Replied 14 October 2014

Thanks for sharing imp info..

varun (partner) (54 Points)
Replied 15 October 2014

is paypal service charges covered under new circular?

dinesh sehgal (9 Points)
Replied 26 February 2016

Dear Sumit, 

Can you help me in understanding the service tax on foreign inward remittance. 

I am into animation business and I am working from India but most of my clients are from outside India, I provide animation services to them and in return they pay me in Dollars. So am I eleigible for paying the service Tax on my income from these clients ? Pls Help Thanks !

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