Dear Sir,
we have imported services from Associate enterprises and as per section 67A we had booked our service tax liability on custom rate at the time of booking bill and the same was discharged on due date.
Now, we have to make payment of the same service (import) but now the exchange rate is higher than the aforesaid custom rate.
Please suggest, whether we have to create addition liability of service tax on account of payment made on higher exchange rate.
K.Gopal-9911052902
Clarification on Service Tax: Exchange Rate Fluctuations Don't Alter Taxation Point per Point of Taxation Rules, 2011. A discussion was initiated regarding the service tax liability on imported services from associated enterprises, particularly when exchange rates fluctuate. The initial query questioned whether additional service tax should be paid due to an increase in exchange rates at the time of payment. Responses clarified that according to the Point of Taxation Rules, 2011, the point of taxation is fixed and cannot be altered due to currency fluctuations unless renegotiation or deficiencies occur. It was advised that excess amounts due to exchange rate changes do not necessitate additional tax payments, and the inquirer was advised to stop paying additional tax. (AI Summary)
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