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Service tax on foreign exchange ???

Neha sharma (-) (1257 Points)

13 January 2013

What is the rate of Service Tax on Foreign Exchange and how is it computed ??

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Vikas (CA) (1135 Points)
Replied 15 January 2013

Is it foreign currecy conversion service???Query not clear...

If yes, then there is an option of composition under Rule 6(7B) -

"[(7B) The person liable to pay service tax in relation to purchase or sale of foreign currency, including money changing, shall have the option to pay an amount calculated at the following rate towards discharge of his service tax liability instead of paying service tax at the rate specified in section 66B of Chapter V of the Act, namely :-]

(a) [0.12 per cent.] of the gross amount of currency exchanged for an amount upto rupees 100,000, subject to the minimum amount of [rupees 30;

(b) rupees [120 and 0.06 per cent.] of the gross amount of currency exchanged for an amount of rupees exceeding rupees 100,000 and upto rupees 10,00,000; and

(c) rupees [660 and [0.012] per cent.] of the gross amount of currency exchanged for an amount of rupees exceeding 10,00,000, subject to maximum amount of rupees [6000] :

Provided that the person providing the service shall exercise such option for a financial year and such option shall not be withdrawn during the remaining part of that financial year.]"