BUSINESS » ECONOMYNEW DELHI, July 10, 2012 No service tax on remittances-confirmation by CBEC SPECIAL CORRESPONDENT SHARE · COMMENT · PRINT · T+ Setting at rest concerns expressed in various quarters, the Central Board of Excise and Customs (CBEC), on Tuesday, clarified that remittances from abroad would not attract service tax. Clarifying the issue through a circular following concerns over reports that a levy of 12 per cent could be imposed on inward remittances by Indians abroad under the new service tax regime from July 1, the CBEC said: “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 CBEC explained that 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,” it said. The circular further noted 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. “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,” it said. The CBEC also clarified that even the Indian counterpart bank or financial institution, which 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, that is, outside India. It may be recalled that the chief ministers of Punjab and Kerala had taken up the issue of service tax on remittances with Prime Minister Manmohan Singh recently. Along with Tamil Nadu and Andhra Pradesh, the four states are among the largest beneficiaries of such foreign currency transfer from emigrants employed in the Gulf countries, Canada and the U.S. According to World Bank data, India received remittances worth $64 billion in 2011, and emerged as the top recipient of such funds among developing countries.
----- Forwarded Message ----- >From: ramanujam thiruvenkataswamy <[email protected]> >To: "[email protected]" <[email protected]> >Sent: Friday, July 6, 2012 11:59 AM >Subject: Fw: [Thatha_Patty] Govt proposes to charge 12.36% Service Tax on NRI >Remittance---Shameless Act by India Government > > >No Tax on NRI remittance fee > >Further to the following Mail with regards to the implementation of 12.36% service tax on the NRI remittance, please read the latest notification which will be a good news for all NRIs. > > > > > >----- Forwarded Message ----- >>From: Raghu <[email protected]> >>To: >>Sent: Thursday, June 28, 2012 5:16 AM >>Subject: [Thatha_Patty] Govt proposes to charge 12.36% Service Tax on NRI >>Remittance---Shameless Act by India Government >> >> >> >> >> >> >> >> >>Govt proposes to charge 12.36% Service Tax on NRI Remittance >> >>Is the Government’s move to levy service tax on foreign remittance fee >>justified? Are NRIs paying the price for lack of clout? >> >>The Union Government proposes to charge 12.36 per cent service tax on the >>fees paid by NRIs sending money to their country. This proposal was >>introduced indirectly in the Proposed Place of Provision of Service Rules. >>What does it mean to a labourer in Dubai or an IT employee in Europe or the >>US? Going by the response of banks and money transfer agencies, this service >>tax will be deducted from the remittances sent by employees, including many >>poor labourers, from the Gulf, the US and other places. This approach is the >>antithesis of the Government’s policy of encouraging exporters, who bring >>foreign exchange to India. Is the Government’s move to levy tax on foreign >>remittance fee justified? Are NRIs paying the price for lack of clout, >>especially as political parties or legislators seldom come to their rescue? >>The move is surprising, more so because no such levy is imposed on inward >>remittances in any other developed or developing countries. The issue has not >>received due attention as it was introduced through the backdoor, ignoring >>the likely adverse impact on the nation. Non-resident Indians transfer more >>than $65 billion annually to dependents in India. These remittances account >>for more than 3 per cent of India’s GDP and have been instrumental in >>reducing the current account deficit by shoring up the country’s foreign >>exchange reserves. >>The levy of service tax on money transfer-related services would act as a >>disincentive for NRI remittances and may lead to reduced inflows. Such a >>scenario may increase India’s dependency on volatile capital inflows such as >>foreign direct investment, which witnessed a sharp fall during the global >>financial crisis of 2008. >>According to an IMF study, NRI remittances are mainly used to provide >>maintenance support to dependents. According to the Ministry of Overseas >>Indian Affairs, around 61 per cent of NRI remittances are used for family >>maintenance. >>States such as Kerala, Tamil Nadu and Punjab are among the regions worldwide >>that depend heavily on international remittance. The share of NRI remittance >>in the State’s net domestic product is 31 per cent in Kerala, 13 per cent in >>Punjab and 7 per cent in Tamil Nadu. The remittances provide social security >>to the dependent families, help them meet basic necessities of life and >>improve their standard of living. The resultant spend on general consumption >>helps contribute to the domestic economy by supporting small business. A >>share of the remittances is also directed towards construction of homes, >>healthcare and education, thereby generating employment in these critical >>service sectors. Any reduction in NRI remittances would reduce the disposable >>income of the dependents and impact development in the respective States. >>Migrant remittances have recently surged to the forefront of development >>agendas worldwide. The urgent need of the hour is to reduce the cost of >>services provided by banks and other money transfer operators to NRIs; tax >>incentives for such services would go a long way in achieving this objective. >>Accordingly, there is need to amend the proposed Place of Provision of >>Service Rules in line with the global practice of not levying service tax on >>money transfer service charges. Will our Ministry of Overseas Indian Affairs >>or the Finance Ministry come to the defence of NRIs, who are an important >>constituent of our growth story? >>Source : Business Line >>June 17, 2012: >>Best Regards >>Prakash Nair >> >> >>Forwarded by Raghu----------PLEASE SHARE THIS MAIL WITH ALL YOUR FRIENDS >>>>________________________________ >> >> "Click to join us at Facebook, to like and comment with other friends of >> WMC" >> >> >> >>__._,_.___ >>Reply to sender | Reply to group | Reply via web post | Start a New Topic >>Messages in this topic (1) >>Recent Activity: >>Visit Your Group >> >>**************************************************************************************************************************************************************************************************************************************************************************************************************************************** >> >> >>Visit following to see uploaded files related to religious and informative >>files uploaded. >> >>http://groups.google.co.in/group/thatha_patty?hl=en >> >>http://groups.yahoo.com/group/Thatha_Patty/ >> >>_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________- >> >> >>Switch to: Text-Only, Daily Digest • Unsubscribe • Terms of Use >>. >> >>__,_._,___ >> >> > >
