By TCN News,
New Delhi: The Finance Ministry of India has said there is no move to impose service tax on remittances coming from NRIs to India. The Central Board of Excise and Customs (CBEC), which runs under the ministry, has made the clarification after media reports and protests against the indication of service tax on remittances. Indo-Kuwait Friendship Society (IKFS) has welcomed the decision.
“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,” said CBEC in a circular on 10th July. It further said: “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. As the amount of remittance comprises money, the activity does not comprise a ‘service’ and thus not subjected to service tax.”
The board further clarified 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 circular said 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.”
Indo-Kuwait Friendship Society (IKFS) in a statement on 12th July said it is “happy to know that the UPA government’s Central Board of Excise and Customs (CBEC) will not charge remittance fees from abroad.”
Last month IKFS had requested all the NRI associations to protest against levying 12.36% service tax and send grievance letters to Vayalar Ravi, Minister of Indian Overseas, and the Finance Minister in Charge Dr. Manmohan Singh to stop charging the levy.
Dr. Ghalib Al-Mashoor, President and Iftekhar Ahamed, Treasurer of IKFS said that UPA Govt. should never underestimate the NRIs who bring more than USD65.0 Billion to the country. “This huge amount of inflow to our beloved mother land India should be continued and illegal transfers such as “Hawalla” and black money should be completely stopped. Levying taxes on foreign remittances will jeopardize the interest of our nation and increase the illegal cash flows.”
IKFS also appreciated the timely intervention by the Chief Minister of Kerala, Oommen Chandy along with other politicians from Punjab to force the government to take back its move.
Link:
http://www.servicetax.gov.in/st-circulars-home.htm