facebook sharing button Share
twitter sharing button Tweet
email sharing button Email
sharethis sharing button Share
linkedin sharing button Share
13 Jan 2016

Payment received in INR through foreign bank to be deemed as convertible foreign exchange to avail export benefit

In case of Commissioner of Service Tax, Mumbai vs PMI Organization Centre (P) Ltd (2016) 65 taxmann.com 7 (Mumbai-CESTAT), honorable CESTAT has held that payment received in Indian Rupees for which FIRC is issued by the bank and payment is routed through foreign bank qualifies the condition of payment 'convertible foreign exchange.

Honorable CESTAT observed that merely because the payment is received in Indian rupees it cannot be said that payment against export has not been received in convertible foreign exchange, as provided in the Export of Services Rules, 2005. Since in the instant case, Indian rupees is received from the recipient of the services through its foreign bank, i.e., Wachovia Bank N.A. USA, receipt of Indian rupees shall be treated as convertible foreign exchange when It is also clearly certified in the FIRC issued by the HDFC Bank that remittance is in convertible foreign exchange.