Just like any commodities and services, taxes are also applied on the foreign money conversion process in India. In other words, if you want to convert Indian currency into foreign currency or you want to convert foreign currency into Indian currency, you have to pay certain taxes to the money conversion dealer. Every authorized currency converter dealer in India, as approved by the Reserve Bank of India, will apply taxes on foreign money exchange process. Previous tax rules have been amended in India after introduction of GST (Goods and Services Tax) in the year of 2017. As per the GST rules, 18% tax will be levied by the government on foreign money conversion. However, the notable thing is that not all transactions are taxable. There are a few slabs for taxing and the details are discussed below.
Slab 1: Up to 1 Lakh
Up to one lakh amount, only 1% of the currency amount has been regarded as taxable and the minimum taxable value is INR 250. So, with this statement, you can understand that if you want to convert INR 20000, you do not have to pay any taxes. The reason behind this is that 1% of the 20,000 amount is equal to INR 200. Currency conversion will be taxable only when you have minimum amount of INR 25000 to convert.
1% of 25000 = INR 250
Now, 18% GST will be applied on this amount.
18% of INR 250 = INR 45
So, for converting INR 25000 amount into foreign currency, you have to pay INR 45 addition charge as GST. GST is not applicable on the commission fee of the currency converter dealer.
Slab 2: INR 1 Lakh to INR 10 Lakh
In this slab, the taxable value is equal to 1000+0.5% of the amount. For example, you want to convert INR 5 lakh into foreign currency. So, the GST on your conversion will be decided in the following method.
Taxable Amount = 1000 + 2000 (0.5% of the (5-1) lakh) = INR 3000
So, INR 3000 is the amount on which GST will be applied. After adding GST, you shall get the following figure:
18% of GST on INR 3000 = INR 540
Trusted Currency Dealer
For currency exchange or transfer money abroad, you need to find trusted currency conversion dealer. For that reason, you can choose CurrencyKart. This is online based currency exchange service which is trusted as it has been approved by the RBI.