In exercise of the powers conferred by clause (aa) of sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax (Determination of Value) Rules, 2006, namely :—

1. (1) These rules may be called the Service Tax (Determination of Value) Amendment Rules, 2011.

(2) Save as otherwise provided under these rules, they shall come into force on the 1st day of April, 2011

2. In the Service Tax (Determination of Value) Rules, 2006 (hereinafter referred to as the said rules), —

after rule 2A, the following shall be inserted, namely :—

“2B. Determination of value of service in relation to money changing. – Subject to the provisions of section 67, the value of taxable service provided for the services referred to in sub-clauses (zm) and (zzk) of clause (105) of section 65 of the Act, so far as it pertains to purchase or sale of foreign currency, including money changing, shall be determined by the service provider in the following manner :—

For a currency, when exchanged from, or to, Indian Rupees (INR), the value shall be equal to the difference in the buying rate or the selling rate, as the case may be, and the Reserve Bank of India (RBI) reference rate for that currency for that day, multiplied by the total units of currency.

Example I: US$100 are sold by a customer at the rate of Rupees 45 per US$.
RBI reference rate for US$ is Rupees 45.50 for that day.
The taxable value shall be Rupees 500.
Example II: INR 70000 is changed into Great Britain Pound (GBP) and the exchange rate offered is Rupees 70, thereby giving GBP 1000.
RBI reference rate for that day for GBP is Rupees 69.
The taxable value shall be Rupees 1000.

Provided that in case where the RBI reference rate for a currency is not available, the value shall be 1% of the gross amount of Indian Rupees provided or received, by the person changing the money:

Provided further that in case where neither of the currencies exchanged is Indian Rupee, the value shall be equal to 1% of the lesser of the two amounts the person changing the money would have received by converting any of the two currencies into Indian Rupee on that day at the reference rate provided by RBI;”

3. In the said rules, in rule 5, after sub-rule (1), the following ‘Explanation’ shall be inserted, with effect from the 1st day of March, 2011 namely :—

“Explanation.— For the removal of doubts, it is hereby clarified that for the services specified in sub-clause (zzzx) of clause (105) of section 65 of the Finance Act, 1994, the value of the taxable service shall be the gross amount paid by the person to whom telecom service is provided by the telegraph authority.”

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September 2021