Foreign Exchange Rates for Valuation of Taxable Service
Recently Rule 11 of Service tax rules, 1994 has been amended.
The Rule is reproduced below for your ready reference:
"11. Determination of rate of exchange – The rate of exchange for determination of value of taxable service shall be the applicable rate of exchange as per the generally accepted accounting principles on the date when point of taxation arises in terms of the Point of Taxation Rules, 2011."
This Rule is applicable from OCt 1, 2014. Prior to this rule, Rate of exchange notified by customs was considered for valuation. However, wef Oct 1 , 2014, assessees can adopt AS 11 , i.e. the spot rate on the date of transaction.