Trade Notice No.11/2012 – Service Tax/SH
Dated Shillong, the 26th July, 2012.
Subject: Subject: Clarification on service tax on remittances – reg.
Attention of the members of Trade, Industry and all others concerned are hereby invited to this Trade Notice No.11/2012-Service Tax/SH and also Board’s Circular No.163/14/2012-ST issued under F.No.354/119/2012-TRU dated 10th July, 2012 on the above subject.
Concerns have been expressed in various forums regarding the leviability of service tax on the remittance of foreign currency in India from overseas.
2. The matter has been examined and it is clarified that there is no service tax per se on the amount of foreign currency remitted to India from overseas. 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.
3. 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.
4. 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.
Hindi version will follow.
Board Circular No.163/14/2012-ST
Issued vide F.No.354/119/2012-TRU dated 10th July, 2012
Disclaimer: Though care has been taken to reproduce the text in its original form, in case of any inadvertent mistake, the above mentioned circular may be referred to.