All foreign currency conversion transactions are subject to GST with effect from 01 July 2017. Value of service for the purpose of the levy of GST in case of purchase/sale of foreign currency is determined as per the table below on which GST @18% is applicable. However, such transactions amongst banks or authorised dealers or between banks and such dealers are exempt and are not liable to GST.
Gross AMOUNT OF CURRENCY EXCHANGED
VALUE OF SERVICE ON WHICH GST TO BE PAID
Less than or equal to INR 1,00,000
1% of the gross amount of currency exchanged, subject to minimum of INR 250/- i.e. minimum GST payable is INR 45.
Greater than INR 1,00,000 and less than or equal to INR 10,00,000
INR 1000 + 0.5% of the gross amount of currency exchanged
Greater than 10,00,000
INR 5,500 + 0.1% of the gross amount of currency exchanged, subject to a maximum of INR 60,000/-, which caps GST payable at INR 10,800/-.
Please find above provision explained through below illustration:
1. USD 3000 is sold to a customer at the rate INR 65 per USD. The gross amount of currency exchanged is INR 1,95,000/- Taxable value of service = INR 1,000 + [(1,95,000-1,00,000)*0.5%] = INR 1,475/- GST payable = INR 1475 * 18% = INR 265.50/
2. USD 20000 is sold to a customer at the rate INR 65 per USD. The gross amount of currency exchanged is INR 13,00,000/- Taxable value of service = INR 5500 + [(13,00,000-10,00,000)*0.1%] = INR 5,800/- GST payable = INR 5800 * 18% = INR 1,044/-
