Service Tax on Foreign Currency Remittance is Exempted
Central Board of Excise and Customer (CBEC), on July 10, 2012, clarified that remittances of Foreign Currency from abroad would not attract Service Tax of 12% . The CBEC explained that in the Service Tax Negative List regime, ‘service’ has been defined in Clause (44) of Section 65B o 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.
The circular further noted that 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.
The CBEC also clarified that even the Indian counterpart bank or financial institution, which 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, that is, outside India.