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Do you need to pay GST on Foreign Exchange?

Do you need to pay GST on Foreign Exchange?
rohit
Rohit24 January 2024

GST applies to everything you purchase, from utilities to professional services. However, if you provide services abroad and receive international transfers and remittances, does GST apply to them? For instance, if you provide IT services to the U.S. from India, should you pay GST on foreign exchange? If yes, how should you go about it? 

This blog explains the GST’s applicability to various foreign exchange payments and how to manage such transactions. 

GST and Foreign Exchange Transactions

1. Inward Remittances

Under the GST regime, the export of goods and services is considered a zero-rated supply since the consumption of goods or services happens outside India. Therefore, GST isn’t applicable as a separate charge over inward remittances to India.

Inward Remittances

For instance, if you are an IT services exporter dealing with foreign clients, you're exempt from paying additional GST on the money you receive as payments from your clients abroad.

Some online platforms may charge an 18% transaction fee for certain products during international money transfers. Importantly, this fee doesn't mean there's an additional GST on the foreign remittance transaction itself.

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