No tax on foreign currency in India from overseas: CBEC says
10.7.2012 (UNI) The Central Board of Excise and Customs (CBEC) today clarified that there is no service tax per se on the amount of foreign currency remitted to India from overseas.
It issued necessary clarification regarding the leviability of service tax on the remittance of foreign currency in to India from overseas. Various concerns have been expressed at different forums in this regard.
The CBEC through a circular issued today stated that the matter has been examined and it is clarified that in the negative list regime, service has been defined in clause (44) of section 65B of the Finance Act 1994, as amended, which excludes transaction in money.
As the amount of remittance comprises money, the activity does not comprise a service and thus not subjected to service tax, it said.
In case any fee or conversion charges are levied for sending such money, they are also 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 said.
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 will be the location of the recipient of the service, that is outside India, in terms of Rule 3 of the Place of Provision of Services Rules, 2012. UNI