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Determination of value of supply - purchase or sale of foreign currency including money changing [Rule 32(2) of CGST Rules] - GST Ready Reckoner - GSTExtract Value of supply service of purchase or sale of foreign currency including money changing- Rule 32(2) of the CGST Rules Option-1 As per rule 32(2)(a) Case 1: Transaction where one of the currencies exchanged from or to Indian Rupees Taxable value is difference between buying rate or selling rate of currency and RBI reference rate for that currency at the time of exchange multiplied by total units of foreign currency. However if RBI reference rate for a currency is not available then taxable value is 1% of the gross amount of Indian Rupees provided/received by the person changing the money. In other words (a) If RBI reference rate is available then value of supply of services ( Buying Rate or Selling Rate - RBI Reference Rate ) (b) If RBI reference rate is not available then value of supply of services 1% of gross amount of Indian Rupees given or received Case 2: Transaction where neither of the currencies exchanged from or to Indian Rupees [ in other words Exchange of a Foreign currencies to another foreign currencies ] Taxable value will be 1% of the lesser of the two amounts the person changing the money would have received by converting (at RBI reference rate) any of the two currencies in Indian Rupees. In other words Value of supply of services = 1% of lower of following amount (a) Covert Foreign Currency 1 with RBI Rate in Indian Rupees (b) Convert Foreign Currency 2 with RBI Rate in Indian Rupees Option-2 as per rule 32(2)(b) The person supplying the service may also exercise the following option to ascertain the taxable value, however once opted then he cannot withdraw the during the remaining part of the financial year: - S. No. Currency exchanged Value of supply 1 Upto ₹ 1,00,000 1% of the gross amount of currency exchanged OR ₹ 250, whichever is higher 2 Exceeding ₹ 1,00,000 and upto ₹ 10,00,000 ₹ 1,000 + 0.50% of the (Gross amount of currency exchanged - ₹ 1,00,000) 3 Exceeding ₹ 10,00,000 ₹ 5,500 + 0.1% of the (Gross amount of currency exchanged - ₹ 10,00,000) OR ₹ 60,000, whichever is lower Examples Example 1:- Prada Forex Pvt. Ltd. registered in delhi, is a money changer. it has undertaken the following purchase and sale of foreign currency:- i) $ 1,000 are purchased from Nandi enterprises at the rate of ₹ 74 per $. RBI reference rate for $ on that day is ₹74.60/-. ii) $ 2,000 are sold to Menavati at the rate of ₹74.50 per $. RBI reference rate for $ for that day is not available. Determination of value of supply under 32(2)(a) i) When RBI reference rate available then value of supply (RBI reference for rate $ - Buying rate of $) * total number of unit of $ bought [ (74.6-74) * $1000 ] i.e. ₹ 600/- ii) when RBI reference rate not available 1% of the gross amount of Indian ₹ received 1% of (74.50 * $ 2000) i.e. ₹ 1490/- Example 2:- X Pvt. Ltd., a money changer, has exchanged US $ 20,000 to Indian ₹ @ 74 per US$. X Pvt. Ltd. wants to value the supply in accordance wants to value in accordance with rule 32(2)(b)of CGST rules. therefore the value of supply under rule 32(2)(b) made by X Pvt Ltd. Value of currency exchange in Indian currency (₹ 74 x $ 20,000/-) i.e. 14,80,000/- Value of supply of services Amount Upto 1,00,000/- ₹ 1000 (1% of the ₹ 1,00,000) OR ₹ 250 whichever is higher 1,000 Exceeding ₹ 1,00,000 and upto ₹ 10,00,000 ₹ 1,000 + ₹ 4,500 [0.50% of the ( ₹ 10,00,000 - ₹ 1,00,000)] 5,500 Above 10,00,000/- ₹ 5980/- {₹ 5,500 + ₹ 480 [0.1% of the ( ₹14,80,000 - ₹ 10,00,000)]} OR ₹ 60,000, whichever is lower 5,980 Total value of supply 12,480
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