08 May 2009
As per rule 6(7B) of service tax rules 1994 amended by notification no. 19/2008 st dated 10.05.2008 service tax on forex will be charged @ 0.25% on amount of dollars exchanged(suppose) but the banks and other dealers are charging a transaction fees on which they are charging service tax @ 12.36% what is the correct procedure?
16 May 2009
As per Rule 6(7B) the forex has an option to pay service tax @ 0.25% on gross amount charged. They have to pay 0.25% on the purchase & sell of the currency. However to exercise such option the forex cannot disclose the commission in the invoice separately. If the commission is disclosed separately than he has to pay service tax on such commission & the rate shall be the rate which will be prescribed from time to time by the Government. Currently the rate is 10.30%
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