Service tax on foreign currency

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bhagchand kumawat

article

23 Points Posted on 01 May 2012

Hello sir,

we are working for foreign companies and getting payment from foreign bank to indian bank directly and we are getting over 10 lakhs per year. so now i want to ask you that is there service tax will be applicable on foreign currancy.

please give us a solution about it.

Thanks

Replies (3)

Prasad

Sr. Manager

625 Points Posted on 02 May 2012

Service tax on Foreign currency is applicable for dealers in FE, not for exporters. If and when you convert this to INR, your bankers will charge ST on the conversion.

Akash

Manager

29 Points Posted on 13 July 2012

Can u help me out .Is this foreign currency conersion is applicable to SEZ units. If applicable at wht rate.

Ajit kumar Dubey

Taxation Manager

797 Points Posted on 13 July 2012

In case any fee or conversion charges are levied for sending money, they are not liable to service tax as the person sending the money and the company conducting the remittance are located outside India. In terms of the Place of Provision of Services Rules, 2012, such services are deemed to be provided outside India and thus not liable to service tax. It is further clarified that even the Indian counterpart bank or financial institution who charges the foreign bank or any other entity for the services provided at the receiving end, is not liable to service tax as the place of provision of such service shall be the location of the recipient of the service, i.e. outside India, in terms of Rule 3 of the Place of Provision of Services Rules, 2012.