Learn the concept of Valuation in case of supply of foreign currencies
Rule 32 of the CGST Rules, 2017 provides the valuation method for 5 specified supplies. This rule overrides other rules of valuation. The value of supply of services in relation to the purchase or sale of foreign currency, including money changing, shall be determined by the supplier of service as per the provisions of Rule 32(2)(a).
Let us understand the said provision through the practical Case Scenario.
Tisha Money Exchangers sold USD $ @ Rs. 65 per USD. The RBI reference rate is Rs. 64.5 per USD as on that date. If Tisha Money Exchangers opt for compounding scheme under Rule 32(2)(b), what shall be the value of supply, if
(i) The number of units exchanged are USD 1,500.
(ii) The number of units exchanged are USD 5,000.
(iii) The number of units exchanged are USD 16,000.
As per Rule 32(2)(b) of CGST Rules, 2017, at the option of the supplier of service, the value in relation to the supply of foreign currency, including money changing, shall be deemed to be the following:
|Case||No. of units exchanged (in USD)||Gross amount of currency (GAC) exchanged ( No. of units * Actual rate of exchange)||Value of Supply Applicable||Value of Supply|
|(i)||1,500||1500 * 65 = Rs. 97,500||1% of GAC = Rs.975||Whichever is higher||Rs.975/-|
|(ii)||5,000||5000 * 65 = Rs. 3,25,000||Rs. 1000+0.5% of (GAC-1,00,000)
= Rs. 1000+1125
|(iii)||16,000||16000*65 = Rs. 10,40,000||Rs.5500+0.1% of (GAC-1000000)= Rs.5540||Whichever is lower||Rs. 5,540/-|
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