Foreign Exchange Transactions 

Currency conversion services allow users to convert their currencies to other foreign or national currencies. When exchanging (buying or selling) a foreign currency in India, the supplier calculates the delivery value. The GST for currency conversion is determined based on the value of the shipment foreign exchange market. Generally, according to the GST Act of 2017, the invoice value is the assessed value and the tax is calculated as a percentage of the value of the supply of goods and services. However, for some specific companies, the GST rules dictate different valuation rules. These valuation methods are optional. The vendor can also choose a valuation according to the usual valuation rules. Rule 32 of the 2017 CGST rules regulates and monitors the value of the provision of services when it comes to foreign exchange Market.



Determination of The Value in Relation to Certain Deliveries

In accordance with article 32 (2) (a) of the CGST law (1) Without prejudice to the provisions of this chapter, the value in relation to the deliveries specified below will be chosen by the provider, as indicated below  forex trading platforms in India.  (2) The service provider determines the value of the service provision in relation to the purchase or sale of foreign currency, including currency exchange, as follows For a currency converted to Indian rupees or Indian rupees, the value is the difference between the buy or sell rate and the Reserve Bank of India reference rate for that currency, multiplied by the total number of currency units

Benchmark Rate

If the Reserve Bank of India benchmark rate for a currency is not available, the value is one percent. the gross amount of Indian rupees provided or received by the money changer best brokers in India for forex. If none of the currencies exchanged is Indian rupee, the value is 1%. the lesser of the two amounts that the person who converted the money would have received if he had converted one of the two currencies into Indian rupees that day at the reference rate provided by the Reserve Bank of India. Provided that a person who provides the services can exercise the option to determine the value in accordance with letter (b) for a financial year and that this option is not revoked during the remainder of that financial year.



Let's Take an Example to Understand How The Value of The Offer is Calculated in Forex.

Amount to be converted into rates according to the reference rate USD RBI Offer value *

Rs. 65,000 Rs. 65 per USD Rs. 63 per 1,000 USD * (65-63) = 2,000

Rs 65,000 Rs 65 per USD Not available 1% of INR amount = Rs 650

EURO 6,500 N / A N / A 1% USD or EURO, whichever is less

Optional Composition Scheme for Paying Taxes in Foreign Currency Exchange:

A person providing the services may exercise the option to determine the value in accordance with Rule 32 (2) (b) for a fiscal year. This option cannot be withdrawn for the rest of this year: third reservation to Rule 32 (2) (a) of CGST and SGST, 2017.

The optional regime under Rule 32 (2) (b) of CGST and SGST, 2017 is as follows

(i) one percent. the gross amount of currency exchanged in an amount of up to one lakh of rupees, subject to a minimum of two hundred and fifty rupees;

(ii) one and a half percent rupee. the gross amount of currency converted to an amount greater than one lakh of rupees and up to ten lakh of rupees; Y

(iii) five thousand five hundred rupees and one-tenth of a percent. the gross amount of currency exchanged in an amount greater than ten lakh rupees, subject to a maximum of sixty thousand

Example: - Calculation of the liability for GST according to rule 32 (2) b of the CGST and the SGST rule 2017

Gross Amount of GST Exchanged

6,500 rupees 250 rupees or H. 1% of 65,000 rupees or 250 rupees, whichever is greater

65,000 rupees 650 rupees, or H. 1% of 65,000 or 250 rupees, whichever is greater

6.50,000 rupees 3,750 rupees or 1,000 plus 0.50% of 5.50,000

Rs 65.00,000 10,500 or Rs 5,000 plus 0.10% of Rs 55,00,000

Rs 6 50,000,000 Rs 60,000 or 5,000 plus 0.10% of Rs 6 40,000,000 subject to a maximum of Rs 60,000

Contact Us