Service tax to be payable on NRI remittance fees to India

Non-Resident Indians (NRIs) / expatriates will have to pay bit more to remit money to India as the government of India will charge service tax on “fees or commission” levied by banks and financial institutions for fees charged for remittances from abroad.

Service tax @ 12.36 per cent is imposed only on the “fee or commission charged by banks for facilitating remittances” and not on the actual amount of remittance.

Central Board of Excise and Customs has clarified in a recent circular that no service tax will be payable per se on the amount of foreign currency remitted to India from overseas. However, an Indian bank or other entity acting as an agent to money transfer service operator, facilitating in the delivery of the remittance to the beneficiary in India for a fee will be liable to tax.