The Indian Government has announced that remittances sent from overseas will not be liable for Service Tax.
“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,” the Central Board of Excise and Customs (CBEC) said in a circular.
The circular clarified that remittance does not comprise a ‘service’ and hence would not be subject to service tax.
The clarification will be a major breather for millions of Indians living abroad, especially those working in the Gulf countries, who are the major source of remittance to India.
The CBEC said that any fee or conversion charges levied for sending remittances are also not liable to Service Tax as the person sending the money and the company conducting the remittance is located outside India.
“Such services are deemed to be provided outside India and thus are not liable to Service Tax. Even the Indian counterpart bank or financial institution that 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 (namely outside India),” it added.
-India Abroad News Service
