Business Daily from THE HINDU group of publications
Monday, Jun 18, 2007
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Business Daily from THE HINDU group of publications Monday, Jun 18, 2007 ePaper |
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Mentor
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Taxation Columns - At Your Service Money & Banking - Financial Services Money changing Sanjiv Agarwal
We undertake money changing activities in individual capacity. Will our services attract service tax? If yes, under which category? Money changing is not a banking or a specified financial service, as defined in Section 65(12) of the Finance Act, 1994. It is also not a foreign exchange trading or broking activity. Recently, the Central Board of Excise and Customs, vide Circular No. 92/3/2007 dated March 12, 2007, clarified that money-changing activities are not taxable services and earlier circulars on the same stand superseded. It was clarified that `money-changing' and `foreign exchange broking' are two distinct activities. Money-changing is the sale and purchase of foreign exchange at the prevalent market rates. And foreign exchange broking is the activity performed as an intermediary, on a commission/brokerage basis, for facilitating the clients who wish to buy or sell forex. The foreign exchange broker providing forex broking service does not hold title to the forex. Accordingly, the Board is of the view that service tax is not leviable on money-changing per se, as such activity does not fall under the category of forex broking.
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