No Service Tax on Foreign Remittance - CBEC Clarifies
AFTER all, it was only a storm in the pipeline. Shashi Tharoor can relax and all the agitation in the Gulf about the brutal Indian Government imposing a high tax on foreign remittances by Indians abroad was only because of a misunderstanding of Law.
And the CBEC Clarifies:
1. There is no service tax per se on the amount of foreign currency remitted to India from overseas.
2. In the negative list regime, 'service' has been defined in clause (44) of section 65B of the Finance Act 1994, as amended, which excludes transaction in money.
3. As the amount of remittance comprises money, the activity does not comprise a 'service' and thus not subjected to service tax.
4. 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. In terms of the Place of Provision of Services Rules, 2012, such services are deemed to be provided outside India and thus not liable to service tax.
5. 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.
Thus, the Board has clarified without any ambiguity that the service is not taxable at all. But why did it take so much time for the Board to clarify this? Why did they allow confusion to spread all over the world? Shouldn't they have reacted immediately after Shashi Tharoor shot off his letter to the Prime Minister? Board should have a slightly better PR outfit.
CBEC Circular No. 163/14/2012-ST, Dated: July 10, 2012