Valuation for Money Changing Business under GST as per Final Valuation Rules
by Paras Mehra 3.11K
Introduction
To ascertain the value of money changing services, a supplier can choose between two options. However, a person supplying the services may exercise this option to ascertain value for a financial year and such option shall not be withdrawn during the remaining part of that financial year.
Let us understand both the options:
Option 1: The value of taxable service provided for the services in 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)
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 at that time, multiplied by the total units of currency.
In simple words,
Value = (Buying Rate – Selling Rate) Total unit of currency.
E.g. If US $100 is sold @ Rs.60 per US $ and the RBI reference rate is 60.27, then the taxable value shall be Rs.[100 X (60.27 – 60)] = Rs.27.
2. However, 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
3. 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
Option 2: The value in relation to supply of foreign currency, including money changing, shall be deemed to be:
- One per cent of the gross amount of currency exchanged for an amount up to one lakh rupees, subject to a minimum amount of two hundred and fifty rupees.
- One thousand rupees and half of a per cent of the gross amount of currency exchanged for an amount exceeding one lakh rupees and up to ten lakh rupees; and
- Five thousand and five hundred rupees and one tenth of a per cent of the gross amount of currency exchanged for an amount exceeding ten lakh rupees, subject to maximum amount of sixty thousand rupees.
Conclusion
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