Example 24

Mr. A gets 125000 Canadian $ converted into 450000 Dirham. RBI ref rate is 1 Canadian $ = Rs. 50 and 1 Dirham = Rs. 16 for that day.

Ans. Second Proviso to Rule 32(2)(a)  (Determination of value in respect of certain supplies)  provides that when neither of the currency is exchanged in Indian rupees, then value of supply would be;  

 Value of Supply= 1% of lesser of two amounts the person changing the money would have received by converting both currencies into Indian rupees at the time at the reference rate provided by RBI.

  Hence in the given case, value of taxable service would be 1% of the lower of the following:-

  (a)  Canadian $ 125000 *50 = Rs. 6250000

  (b)    Dirham 450000*16 = Rs. 7200000

Value of supply = 6250000*1% = Rs. 62500

In the above Example nos. 22, 23 & 24 at the option of supplier the value in relation to supply of foreign currency according to RULE 32 (2) (b) would be deemed as the following;

IF Gross amount of currency exchanges (GAE)=  upto 1 lakh 

Value =1% GAE or Rs 250 (Which ever higher)

IF GAE = Exceeding 1 lakh and up to 10 lakh

Value= ½ % (GAE-1 lakh) + 1000 Rs

  IF GAE = > 10 lakh

 Value = 1/10 % (GAE-10lakh) +5500 Rs  (Subject to maximum of Rs 60000)