@here, I have written a technical blog(https://strapi.io/blog/how-to-build-a-real-time-chat-forum-using-strapi-socket-io-react-and-mongo-db) for a company called Strapi. Bank has levied GST 18% on incoming remittance that I received. But as per my knowledge, for "*exports of services*" outside India, GST is not applicable. I received the amount in US Dollars. Also, I'm not sure why the bank has put my purpose code as "Entertainment Services"? Does anyone know what would be the correct purpose code for it? Could anyone confirm it? You can ping me directly on slack. It's urgent. Thanks!

@square-fountain-57235 did they add 18% GST on the who remittance amount or just on their service fees (they do add GST on their service fees) which is usually a flat fee b/w 500-1500 Rs. For export of services, the GST is 0% (this does not mean that it is not applicable) and this really depends on your case. If you make less than 20L a year and don;t have a GST number, then GST does not apply in any case. Also, Entertainment Services doesn;t sound like the right purpose code, was there anything in the lines of techincal writing, though discussing with a CA would make more sense.

"did they add 18% GST on the who remittance amount or just on their service fees"? How do I know the difference? I actually don't have a GST number. I feel the same that "Entertainment Services" is a wrong purpose code here.

How do I know the difference?

is the GST 18% of the total amount or much less than that? As Karan mentioned, GST on the conversion fees are normal. I feel one of these purpose codes might be ideal for a blog post, but it will be better if you consult a CA for this

These are not the purpose codes for technical documentation work (which also partly involves software development ) @melodic-jordan-81418 . I'm not subscribing to newsletters or periodicals. 😉

It seems to be for the Rs.250 conversion charge

Okay, And 18% GST on the conversion charges? I have a question then, for example, if you go to this link(https://remoteindian.com/guides/tax-guide#do-you-need-to-file-gst) It's mentioned that "If your client is a foreign one, you will file 0% GST - so you don't have to pay any GST if you receive foreign funds" Could you please clarify this? I'm really confused now

This basically means that the GST for the services you provided will be 0%. That is, you won’t have to pay the GST on the $200 you received. Now the currency conversion is a service that the bank provides you. This service costs Rs. 250 + 18% GST. So in short, you are not paying the GST for writing a blog post for your client, but you are paying GST for the small fee bank charges for converting your money from USD to INR. This is normal and does not come under the 0% clause

ahh! Thanks a lot 🙂

@square-fountain-57235 Banks usually charge 2 charges: 1. An inward remittance charge of Rs. 250 which they have mentioned. Then 18% over this. 2. A currency conversion charge — which is not mentioned in your statement - but deducted from the INR received. This is usually hidden. But we can reverse calculate this to be Rs. 250 as well (mostly) because they are charging you 9% at 22.5 So it seems you got charged 250 for Inward Remittance and Rs. 250 for currency coversion. And GST accordingly.

So as I understand correctly, I understand the conversion charges which is 250 rs and GST on top of it. But why would they charge again 250 rs for Inward Remittance? Does this mean am I paying GST? It's not clear to me 😞

Consider 1 part as the fixed charge for converting the currency, another as a commission on the USD to INR conversion rate. For example, this is how it looks in my inward remittances

Do banks usually charge a commission? Say if a contractor was working from India for a US based company, are these charges levied when the money is transferred to the contractor?

Yes. The commission is the difference between the USD to INR market rate and the rate at which the bank actually converted your funds

@melodic-jordan-81418 I really didn't understand it 😞

e.g. if the USD to INR market rate is Rs.73.5 but the bank converted your funds at the rate of Rs.72.5, then the Rs.1 difference is the bank’s commission. The banks usually try to hide this commission

I see. is that legal? Why do they hide it?

@square-fountain-57235 long story short, if you are a retail customer (which you probably are in this case), you will most always be charged the Rs. 250 everytime someone sends you money from abroad. This is common across all banks. If you are a business customer or have an EEFC account, the Rs. 250 gets waived off. So if you are expecting a lot of these, might make sense to go for one of those. It is definitely legal. They can charge any rate they want. Again, if you are a business / EEFC customer, you can usually negotiate the rates. For example, many of us have a 20 - 30p rates with our banks. So if the market rate is 75 INR to USD, the bank will charge you only 74.80 and keep 20p. That is how they make money. For retail customers, this price is much higher - almost 1 - 2 Re. I don’t know why they hide it. But it is legal and something everyone goes through.

@loud-glass-33663 @melodic-jordan-81418 @purple-animal-84963 for clarify this to me. Really appreciate it 🙂