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Title: Service Tax on Remittances Post by: polynesia on October 15, 2014, 02:52:23 AM http://timesofindia.indiatimes.com/city/mumbai/Money-transfer-from-abroad-in-service-tax-net/articleshow/44818306.cms Money transfer from abroad in service tax net The Centre on Tuesday decided to garner revenue by indirectly levying service tax on NRI remittances, a move that will eat into the earnings of lakhs of NRIs who regularly send money back home. The world seems to be pushing people into using bitcoins. ;D Title: Re: Service Tax on Remittances Post by: KJBit on October 15, 2014, 05:59:36 AM I loved the hypothetical example someone cites in the article.
Quote "Assuming that Rs10 is the additional cost [transaction fee charged by money transfer agent] of every Rs 100 that an NRI sends, now only Rs 98.76 will be received for every Rs 100 sent [after reducing 12.36% service tax on Rs10]," Menon said. What's hilarious about this example is that Mr. Menon has completely ignored the 10 rupees from his calculations. The actual cost of sending Rs. 100 from abroad, according to the example, is Rs.11.34, and not Rs.1.34 as Mr. Menon makes out to be. So the amount received will be Rs. 88.76 and not Rs.98.76. Title: Re: Service Tax on Remittances Post by: adv.kanishk on October 15, 2014, 03:03:40 PM I loved the hypothetical example someone cites in the article. Quote "Assuming that Rs10 is the additional cost [transaction fee charged by money transfer agent] of every Rs 100 that an NRI sends, now only Rs 98.76 will be received for every Rs 100 sent [after reducing 12.36% service tax on Rs10]," Menon said. What's hilarious about this example is that Mr. Menon has completely ignored the 10 rupees from his calculations. The actual cost of sending Rs. 100 from abroad, according to the example, is Rs.11.34, and not Rs.1.34 as Mr. Menon makes out to be. So the amount received will be Rs. 88.76 and not Rs.98.76. Actually the example is right just the manner it is written is wrong. He intended on saying that for every Rs. 100 agent charges Rs. 10 (so total amount was Rs. 110) and on that Rs. 10 service tax @12.36% would be leviable which comes out to be Rs. 1.236. So if a person sends Rs. 110 to someone in India then that person would only receive Rs. 98.764 i.e. [Rs. 110- Rs. 10(agent fee) - Rs. 1.236 (service tax on Rs.10)] No doubts it shall trigger sending the remittance through bitcoin but it also depicts the intent of the government to tax on foreign transfers. But bitcoin exchanges charges less than 1% so that would not be too burdensome on the people receiving money in India. Title: Re: Service Tax on Remittances Post by: polynesia on October 15, 2014, 11:58:23 PM I loved the hypothetical example someone cites in the article. Quote "Assuming that Rs10 is the additional cost [transaction fee charged by money transfer agent] of every Rs 100 that an NRI sends, now only Rs 98.76 will be received for every Rs 100 sent [after reducing 12.36% service tax on Rs10]," Menon said. What's hilarious about this example is that Mr. Menon has completely ignored the 10 rupees from his calculations. The actual cost of sending Rs. 100 from abroad, according to the example, is Rs.11.34, and not Rs.1.34 as Mr. Menon makes out to be. So the amount received will be Rs. 88.76 and not Rs.98.76. Actually the example is right just the manner it is written is wrong. He intended on saying that for every Rs. 100 agent charges Rs. 10 (so total amount was Rs. 110) and on that Rs. 10 service tax @12.36% would be leviable which comes out to be Rs. 1.236. So if a person sends Rs. 110 to someone in India then that person would only receive Rs. 98.764 i.e. [Rs. 110- Rs. 10(agent fee) - Rs. 1.236 (service tax on Rs.10)] No doubts it shall trigger sending the remittance through bitcoin but it also depicts the intent of the government to tax on foreign transfers. But bitcoin exchanges charges less than 1% so that would not be too burdensome on the people receiving money in India. I guess bitcoin exchanges would have been subject to service tax even before this circular came out, right? Title: Re: Service Tax on Remittances Post by: adv.kanishk on October 16, 2014, 10:58:07 AM Yes, if the commission earned by these bitcoin exchanges would have exceeded the limit of Rs. 10 Lakh in a financial year then they have to apply for service tax number and post exceeding the 10 lakh limit they would have to pay service tax thereon.
Title: Re: Service Tax on Remittances Post by: SatishMotaNaak1 on October 16, 2014, 11:08:22 AM Yes it'd have come under that umberella.
Title: Re: Service Tax on Remittances Post by: newIndia on October 16, 2014, 02:40:43 PM Yes, if the commission earned by these bitcoin exchanges would have exceeded the limit of Rs. 10 Lakh in a financial year then they have to apply for service tax number and post exceeding the 10 lakh limit they would have to pay service tax thereon. What happens if the commission earned by the exchange is in Bitcoin which values more than 10 lakh INR ? Do they still have to pay service tax ? Title: Re: Service Tax on Remittances Post by: polynesia on October 18, 2014, 01:31:49 AM Yes, if the commission earned by these bitcoin exchanges would have exceeded the limit of Rs. 10 Lakh in a financial year then they have to apply for service tax number and post exceeding the 10 lakh limit they would have to pay service tax thereon. What happens if the commission earned by the exchange is in Bitcoin which values more than 10 lakh INR ? Do they still have to pay service tax ? I think the answer is yes. Whether you earn in rupees or bitcoins, tax laws and levels should be the same. Title: Re: Service Tax on Remittances Post by: adv.kanishk on October 18, 2014, 10:04:30 PM Yes, if the commission earned by these bitcoin exchanges would have exceeded the limit of Rs. 10 Lakh in a financial year then they have to apply for service tax number and post exceeding the 10 lakh limit they would have to pay service tax thereon. What happens if the commission earned by the exchange is in Bitcoin which values more than 10 lakh INR ? Do they still have to pay service tax ? |