Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: due date for vat payment :: articles on VAT and GST in India :: TDS :: TAX RATES - GOODS TAXABLE @ 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: form 3cd :: VAT Audit :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: cpt :: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: empanelment :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company
 
 
Service Tax »
 Payment made in revenue sharing deal exempt from service tax
 India seen posting stronger growth as businesses adjust to new tax
 GST High Powered Committee On Return Filing - Representation by GST Research Foundation
  Changes In Central Goods And Services Tax Rules, 2017
 GST return filing to be a breeze for small businesses
 Changes In Central Goods And Services Tax Rules, 2017
 Simple tax made complex
 Govt may review monthly GST return filing process
 Central Goods and Services Tax (Eleventh Amendment) Rules, 2017
 Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017
 Composition Scheme - the Central Goods and Services Tax (Removal of Difficulties) Order, 2017

Banks may get service tax breather on forex turnover
February, 16th 2009

The finance ministry may give relief to banks by lowering service tax on their foreign exchange turnover.

At present, the banks and the Central Board of Excise and Customs (CBEC), which administers indirect taxes, are locked in a tussle with the latter asking the banks to collect service tax at the rate of 0.25 per cent on every forex transaction.

Banks have resisted the CBEC move by saying that there is no service component in forex transactions and that the tax may make forex business unviable as it operates on very thin margins.

The Indian Banks Association (IBA), the apex forum of commercial banks, has already taken up the issue with the finance ministry, which has acknowledged its concerns and has instructed the revenue department to address the issue. Both government and banking sources say that the service tax rate is likely to be lowered.

The presumptive rate of 0.25 per cent on the turnover is unrealistic as banks may not be making profit at all, said a senior banker.

Crucially, banks are upset that the tax has to be levied on the rupee equivalent amount for every forex transaction. At present, the service tax incidence is 12.36 per cent, or 0.25 per cent of the turnover, if it is not levied.

After service tax was imposed on forex transactions from May 16 last year, all banks started collecting a uniform fee of Rs 100 per transaction, irrespective of the value of the transaction, to protect their business from losses. Prior to that, banks did not charge a separate fee for this.

The revenue department had objected to this practice on the grounds that banks are not capturing the entire margin in forex transactions.

Banks say the levy of 0.25 per cent on every transaction will affect the forex market and result in losses as they will not be able to pass on the additional cost to customers as is the case with exporters, who keep on converting forex receipts into rupees.

Banks make a profit in forex transactions by charging a thin spread over the foreign currency. If the rupee is traded at 49.50 against the dollar, banks sell dollars above 49.50, but buy them at below this level.

Banks attempt to retain a margin while changing currency to cover the forex exposure risk due to daily price movements. Also, there are hundreds of transactions daily and it is difficult to keep track of gains or losses in each transaction.

There are broadly two type of forex transactions covered under the tax net bank-to-bank and bank-to-customers. The margins in inter-bank trading are very thin.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Content Management System developers CMS developers Content Management Solutions CMS Solutions CMS India Content Management System India CMS development India Website CMS Website Content Management India Portal CMS India CMS Outsourcing CMS Vendor Complete CMS Custom CMS Services

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions