Avail FIRCs for payment received through PayPal

 

The export turnover i.e., the services rendered outside India is exempt from service tax. Though this rule is a relief to all the service providers providing services outside India, but for those service providers who receives the payment of export services in their PayPal account could not get the benefit of the same.

To claim the exemption, one need to show the  evidence such as  agreement with the service receiver, invoices raised on them, a certificate from the bank (where the monies are received and credited to your account) called “Foreign Inward Remittance Certificate” (FIRC).

 

When it come to receiving of monies in the PayPal account, the PayPal converts the money from USD to INR at their end and then route the money to Citibank India which in turn sends NEFT transaction in INR to the respective bank account of service providers in India. In this process, the Indian Bank says that since they are getting money in INR they can’t issue FIRC certificate.

 

Every transfer of funds from PayPal account to your bank account will require a separate FIRC. In absence of FIRC, service providers were not able to receive the exemption on the export services as money that comes in foreign convertible exchange which has a FIRC issued can be considered for Service Tax exemption. This created trouble for Indian service providers to prove the export turnover for lack of FIRC document from the banker.

 

Understanding the need and importance, PayPal has come up with a solution that you can now request its bank (Citibank) through your bank where you received the monies from PayPal.

 

This process involves a letter to Citibank mentioning the relevant details and submits the same to your banker. Once your banker forwards it to Citibank, your FIRC will be processed by Citibank and will be couriered to your address mentioned on the request letter. Now, you only need to contact the bank where your PayPal withdrawals are credited to request a FIRC and a letter addressed to Citibank with the major following information:

1. Unique Transaction Reference number (UTR)
2. Customer Name
3. Account Number
4. Date and purpose of the payment
5. Address where FIRC need to be delivered

 

Thus, with the FIRC delivered you can use this certificate as a valid document for proving that the transaction is export turnover.

 

For Format for FIRC request : https://www.paypalobjects.com/webstatic/en_IN/mktg/pdf/Sample-FIRC-Request-Letter.pdf

For any assistance, visit taxmantra.com

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