As per law, Service Tax is levied on any service provided or to be provided for a consideration. And therefore the computation of the value of services becomes difficult.

Determination of Rate Of Exchange for Service Tax

In such cases, the Govt has prescribed the following methods for the computation of Service Tax on Foreign Exchange Conversion. The Government has prescribed 2 methods for the computation of Service Tax on Foreign Exchange, and the service provider is free to choose any method for the computation of Service Tax on Forex Conversion.

However, if the service provider opts for any method, he will have to use the same method for the computation of Service Tax on Foreign Exchange Conversion throughout the year and cannot change the method. The Ministry of Finance vide Notification No.

Service Tax on Foreign Exchange Conversion/Remittance

Amongst other amendments, this Notification has also brought an Amendment in Rule 6 7B which is for the computation of Service Tax on Forex Conversion. As per this Amendment, Service Tax on Foreign Exchange shall be payable as follows: Thus, the maximum amount of service tax payable on exchanging foreign currency has been capped at Rs.

This method is an easy and convenient way of computation of Service Tax on Foreign Exchange and most of the Banks and Foreign Exchange Dealers are applying this method.

The 2 nd method has also been explained hereunder for your ready reference.

Service Tax Rules

If a currency is exchanged from or to Indian Rupees then, as per Notification No. The Ministry of Finance vide Circular No. Even if any fee or conversion charges are there for sending such monetary remittance to India, no service tax would be levied on such conversion charges as the person sending the money and the company conducting the remittance are located outside India.

In terms of Place of Provision of Service Rules , such services are deemed to be provided outside India and therefore there is no Service Tax on Remittance.

Karan is CA by Qualification with the rare distinction of being awarded All India Rank He is also the founder of this website and loves to help people with their Tax Queries. Service Tax on Foreign Exchange Remittance.

Select your email service Close Gmail Yahoo! Calculation of Service Tax on Foreign Exchange Conversion The Government has prescribed 2 methods for the computation of Service Tax on Foreign Exchange, and the service provider is free to choose any method for the computation of Service Tax on Forex Conversion.

Abatement Scheme for Computation of Service Tax on Foreign Exchange The Ministry of Finance vide Notification No. Service Tax on Remittance The Ministry of Finance vide Circular No. About the Author Karan Batra Karan is CA by Qualification with the rare distinction of being awarded All India Rank Recommended Posts Procedure for Online e-payment of Service Tax Service Tax Refund: TDS on Property — NDTV.