Gst rates
This query is : Resolved
07 July 2017
I want to know the rates of GST applicable on commission received by forex dealers on money transfer business working as agent say under MoneyGram and Western Union. Which SAC code is applicable to such private forex dealers for providing such money transfer services?
Whether such forex dealers will be liable to pay the GST on sale and purchase of foreign currency and earning profit in the form of difference in buying and selling rate of foreign exchange. Such forex dealers also charge service charges from customers on foreign exchange. Will this be covered by GST. What is the SAC code and rate of GST on such services?
Whether such forex dealers will be liable to pay the GST on sale and purchase of foreign currency and earning profit in the form of difference in buying and selling rate of foreign exchange. Such forex dealers also charge service charges from customers on foreign exchange. Will this be covered by GST. What is the SAC code and rate of GST on such services?
07 July 2017
Commissioner received by forex dealer is a finacial service falling under HSN 9971, attracting rate of tax @18%. Valuation of services shall be done as provided in Rule 32(2) of the CGST Rules.
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08 July 2017
Thanks Mr Rajesh Kumar
What about the exchange rate profit earned by forex dealers. Are such dealers liable to pay GST on such profit amount?
What about the exchange rate profit earned by forex dealers. Are such dealers liable to pay GST on such profit amount?
27 July 2024
### GST on Exchange Rate Profit Earned by Forex Dealers
**Exchange Rate Profit** earned by forex dealers (foreign exchange dealers) arises from trading or exchanging currencies and can be a part of their business income. Here’s how GST applies to such profits:
#### 1. **Nature of Forex Dealer Services**
Forex dealers typically provide services such as:
- Buying and selling foreign currencies
- Currency exchange services
- Trading in forex markets
#### 2. **GST Applicability on Forex Services**
**Forex Services Provided:**
- **GST Rate:** Forex dealers' services, such as buying and selling foreign currencies, fall under **“Financial Services”**.
- **HSN Code:** **9971**
- **GST Rate:** **18%**
**Explanation:**
- The financial services provided by forex dealers are subject to GST. This includes services related to currency exchange but **not the profit from exchange rate fluctuations**. The profit earned due to fluctuations in exchange rates is part of the business income and is not directly subject to GST. GST is applicable to the service fees or commission charged by forex dealers for providing the service.
#### 3. **Exchange Rate Profit**
- **Profit Earned from Exchange Rate Fluctuations:**
- This is considered business income and is subject to income tax under the Income Tax Act, not GST.
- **GST is not levied on the profit itself** but on the service charges or fees for providing forex services.
### Summary
- **Forex Dealer Services (e.g., currency exchange):** **18% GST** under **HSN Code 9971**
- **Profit from Exchange Rate Fluctuations:** **Not subject to GST**; treated as business income for income tax purposes.
### Key Points:
- **Service Charges/Fees:** These are subject to GST and should be billed with the appropriate GST rate.
- **Profit Handling:** Profits earned from exchange rate differences are not directly taxed under GST but are considered for income tax.
### Recommendations:
- **Consult a Tax Professional:** For detailed guidance on GST compliance and income tax treatment of profits earned by forex dealers, consulting a tax professional or financial advisor is recommended.
This should clarify how GST applies to forex dealer services and the treatment of profits from exchange rate fluctuations.
**Exchange Rate Profit** earned by forex dealers (foreign exchange dealers) arises from trading or exchanging currencies and can be a part of their business income. Here’s how GST applies to such profits:
#### 1. **Nature of Forex Dealer Services**
Forex dealers typically provide services such as:
- Buying and selling foreign currencies
- Currency exchange services
- Trading in forex markets
#### 2. **GST Applicability on Forex Services**
**Forex Services Provided:**
- **GST Rate:** Forex dealers' services, such as buying and selling foreign currencies, fall under **“Financial Services”**.
- **HSN Code:** **9971**
- **GST Rate:** **18%**
**Explanation:**
- The financial services provided by forex dealers are subject to GST. This includes services related to currency exchange but **not the profit from exchange rate fluctuations**. The profit earned due to fluctuations in exchange rates is part of the business income and is not directly subject to GST. GST is applicable to the service fees or commission charged by forex dealers for providing the service.
#### 3. **Exchange Rate Profit**
- **Profit Earned from Exchange Rate Fluctuations:**
- This is considered business income and is subject to income tax under the Income Tax Act, not GST.
- **GST is not levied on the profit itself** but on the service charges or fees for providing forex services.
### Summary
- **Forex Dealer Services (e.g., currency exchange):** **18% GST** under **HSN Code 9971**
- **Profit from Exchange Rate Fluctuations:** **Not subject to GST**; treated as business income for income tax purposes.
### Key Points:
- **Service Charges/Fees:** These are subject to GST and should be billed with the appropriate GST rate.
- **Profit Handling:** Profits earned from exchange rate differences are not directly taxed under GST but are considered for income tax.
### Recommendations:
- **Consult a Tax Professional:** For detailed guidance on GST compliance and income tax treatment of profits earned by forex dealers, consulting a tax professional or financial advisor is recommended.
This should clarify how GST applies to forex dealer services and the treatment of profits from exchange rate fluctuations.
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