The Central Board of Excise and Customs has clarified that service tax would not apply to remittances to India in foreign currency or exchange commission and bank fee on such remittances.

The Board said in a circular that there was no service tax per se on the amount of foreign currency remitted to India from abroad. Service excluded transaction in money.

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.

The Board also clarified 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, that is, outside India.

Minister for Rural Development and Non-resident Keralites Affairs K. C. Joseph had earlier taken up the issue with Prime Minister Manmohan Singh through Minister of State for External Affairs and Human Resources Development E. Ahamed.