New Post has been published on Indian Tax Updates
New Post has been published on http://www.indiantaxupdates.com/service-tax-on-money-sent-to-india/
Service Tax on Money Remittance to India
Service Tax on Money Sent to India
Central Government vice Circular No. 180/06/2014 – ST has expanded the scope of service tax has by taking service of “Inward remittances from Abroad to Beneficiaries in India” under the purview of service tax. Last year the total of inward remittance was USD 65 Billion which is expected to increase this year. Below I have explained how much service tax would be levied and the impact of this on your pocket.
How Much Service Tax would be levied?
The current rate of Service Tax is 12.36%, thus same rate would be levied on the service of inward remittance.
On What amount service tax would be payable?
This is where all your fear would be vanished because service tax would be levied only on the “Service Charge” or “Fee” that your bank/money transfer agency charges you.
Circular says:
“No service tax is payable per se on the amount of foreign currency remitted to India from overseas. As the remittance comprises money, it does not in itself constitute any service in terms of the definition of ‘service’ as contained in clause (44) of section 65B of the Finance Act 1994.”
Suppose if your bank charges 15 dirhams (Rs.255) for transferring 1000 dirhams (Rs.17,000) then the service tax of 12.36% would be levied on the bank charges of Rs.255 not on the amount transferred. So the service tax would be Rs.31.50 (Rs.255*12.36%) pushing up the total charges of transferring to Rs.286. Now the total amount you would be getting is Rs.16990-Rs.255-Rs.31.50 = Rs.16703
What is the date of applicability?
The date of applicability is not yet specified, although it would be soon because the original circular was passed long back but was not made applicable due to applicability of negative list regime.
Is this move Favorable?
As explained above the impact is very less on your pocket so this move should be welcomed by each NRI.