The Government today said remittances from
abroad will not attract service tax, putting to rest the concerns raised in view
of new tax norms.
“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.
The clarification follows concerns over
reports that there was a move to levy 12 per cent tax on money sent back home by
Indians abroad under the changed service tax regime from July
1.
Emerging as the top recipient among
developing nations, India received
remittances of $64 billion in 2011, according
to the World Bank data.
Chief Ministers of Punjab and Kerala,
which are among the states receiving the largest remittances from expatriates,
had taken up the matter with the Prime Minister, Dr Manmohan
Singh.
CBEC said, “Concerns have been expressed
in various fora regarding the leviability of service tax on the remittance of
foreign currency in India from overseas.”
It added, “remittance comprises money, the
activity does not comprise a ‘service’ and thus not subjected to service tax.”
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 issued by the Board said.
The CBEC further clarified that Indian
bank or financial institution which charge the foreign bank for the services
provided at the receiving end, is not liable to service
tax.
Kerala, Punjab, Tamil Nadu and Andhra
Pradesh have maximum number of emigrants mostly in the Gulf.
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