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Rule 32 — value in case of supply of foreign currency from one Indian rupee to another and vice-versa: a registered foreign-exchange dealer may exercise the option under Rule 32(2)(b) to pay tax on a percentage of:
ASliding scale: 1% up to Rs 1 lakh of gross sum, then 1000 + 0.5% on next slab up to Rs 10 lakh, then 5500 + 0.1% over Rs 10 lakh, capped at Rs 60,000
B1% of gross amount of currency exchanged
CAlways 0.5%
DAlways 2%
Answer & Solution
Correct answer: A. Sliding scale: 1% up to Rs 1 lakh of gross sum, then 1000 + 0.5% on next slab up to Rs 10 lakh, then 5500 + 0.1% over Rs 10 lakh, capped at Rs 60,000
1. Rule 32(2)(b) (alternative scheme for forex dealers): 1% of gross amount of currency exchanged up to Rs 1 lakh, subject to minimum Rs 250.
2. Next slab (Rs 1 lakh to Rs 10 lakh) — Rs 1,000 + 0.5% of amount exceeding Rs 1 lakh.
3. Over Rs 10 lakh — Rs 5,500 + 0.1% of excess over Rs 10 lakh, subject to maximum Rs 60,000.
_Source: ICAI BoS CA Final Paper 8, Ch 5 "Value of Supply", §Rule 32(2)(b)_
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