Quote from: adv.kanishk on October 15, 2014, 03:03:40 PM

Quote from: KJBit on October 15, 2014, 05:59:36 AM

I loved the hypothetical example someone cites in the article.

Quote

"Assuming that Rs10 is the additional cost [transaction fee charged by money transfer agent] of every Rs 100 that an NRI sends, now only Rs 98.76 will be received for every Rs 100 sent [after reducing 12.36% service tax on Rs10]," Menon said.

What's hilarious about this example is that Mr. Menon has completely ignored the 10 rupees from his calculations. The actual cost of sending Rs. 100 from abroad, according to the example, is Rs.11.34, and not Rs.1.34 as Mr. Menon makes out to be. So the amount received will be Rs. 88.76 and not Rs.98.76.

Actually the example is right just the manner it is written is wrong. He intended on saying that for every Rs. 100 agent charges Rs. 10 (so total amount was Rs. 110) and on that Rs. 10 service tax @12.36% would be leviable which comes out to be Rs. 1.236. So if a person sends Rs. 110 to someone in India then that person would only receive Rs. 98.764 i.e. [Rs. 110- Rs. 10(agent fee) - Rs. 1.236 (service tax on Rs.10)]

No doubts it shall trigger sending the remittance through bitcoin but it also depicts the intent of the government to tax on foreign transfers. But bitcoin exchanges charges less than 1% so that would not be too burdensome on the people receiving money in India.

I guess bitcoin exchanges would have been subject to service tax even before this circular came out, right?