Determination of value of service in relation to money changing [Rule 2B] :

Rule 2B provides the manner of determination of the value of taxable service provided so far as the services so provided pertains to purchase or sale of foreign currency, including money changing. The value of service shall be determined as follows:-

(a) For a currency, when exchanged from, or to, Indian Rupees (INR): For a currency, when exchanged from, or to, Indian Rupees (INR), the value shall be equal to the difference in the buying rate or the selling rate, as the case may be, and the Reserve Bank of India (RBI) reference rate for that currency at that time*, multiplied by the total units of currency.

*Note: Where the RBI reference rate for a currency is not available

Where the RBI reference rate for a currency is not available, the value shall be 1% of the gross amount of Indian Rupees provided or received, by the person changing the money.

Illustration I: US$ 1,000 are sold by a customer at the rate of Rs 45 per US$. RBI reference rate for US$ is Rs 45.50 for that day. Value of taxable service= (RBI reference rate for $ – Selling rate for $) × Total units = Rs (45.50 – 45) × 1,000 =Rs 0.50 × 1,000 The taxable value shall be Rs 500. Illustration II: INR 70,000 is changed into Great Britain Pound (GBP) and the exchange rate offered is Rs 70, thereby giving GBP 1000. RBI reference rate for that day for GBP is Rs 69. The taxable value shall be Rs 1,000.

(b) Where neither of the currencies exchanged is Indian Rupee: Where neither of the currencies exchanged is Indian Rupee, the value shall be equal to 1% of the lesser of the two amounts the person changing the money would have received by converting any of the two currencies into Indian Rupee on that day at the reference rate provided by RBI.