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August 2012

Clarification on service tax on remittance from abroad to India — Circular No. 163/14/2012-ST, dated 10-7-2012.

By Tarun Ghia, Brijesh Cholera, Pratik Mehta, Chartered Accountants
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This Circular has clarified that no service tax will be leviable on the amount of foreign currency remitted to India from abroad as the service has been defined u/s.65B(44) and the definition specifically excludes a transaction in money or actionable claim.

As the remittance of foreign currency from abroad is a transaction in money, therefore, it will fall outside the ambit of service. 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.

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