How is GST charged on foreign currency conversion of export receipts?

Every time foreign currency from a client abroad is converted into rupees, someone performs a currency conversion service. If that someone is an Indian bank, GST applies to the service, using a special valuation rule. The amount is usually small, but exporters who reconcile statements line by line will see it, and registered exporters can claim it back.¹⁴

This guide explains how the value is calculated, gives worked examples, and covers input tax credit and the points that are less settled. It reflects the rules as of 28 October 2026.¹

What is GST on foreign currency conversion of export receipts?

GST on foreign currency conversion of export receipts is tax on the bank's service of buying your foreign currency and paying you rupees, which rule 32(2) of the Central Goods and Services Tax (CGST) Rules, 2017 values as a supply "in relation to the purchase or sale of foreign currency, including money changing".¹ The conversion is a separate supply from your export: the export to your client is zero-rated, but the bank's conversion service to you is not.¹⁴

• What is taxed: the bank's conversion service, at a deemed value.¹
• What is not taxed: the full amount of your export receipt.¹⁴
• Who chooses the method: the bank, as supplier of the service.¹

The GST appears on the bank's statement or remittance advice, separate from any flat fee.

Who pays GST on currency conversion of export receipts?

Every exporter whose bank converts a foreign receipt into rupees pays GST on the conversion, but only a GST-registered exporter can recover it.¹²⁴

Check how your own bank bills GST before you assume the cost.

How do you claim GST on currency conversion as input tax credit?

You claim GST on currency conversion as input tax credit by having the bank bill the GST to your GSTIN and then claiming it in your return, as allowed by section 16(2) of the Integrated Goods and Services Tax (IGST) Act for zero-rated supplies.⁴

1. Give the bank your GSTIN: make sure the bank has your GSTIN on the account, so the GST is billed to your registration.
2. Download the invoice: download the bank's GST invoice or statement for the month.
3. Match and claim: match it in your GST credit statement and claim it in your return.

An exporter under a Letter of Undertaking (LUT) can then claim a refund of unutilised credit under section 16(3).⁴ See refund of ITC on zero-rated supplies.

What values and rates apply to GST on currency conversion?

The value of a currency conversion is worked out by the bank under rule 32(2) using one of two methods, and GST is then charged on that value at the bank's applicable rate.¹²

• Method 1, spread (rule 32(2)(a)): for a currency exchanged to or from rupees, the value is the difference between the bank's buying or selling rate and the Reserve Bank of India (RBI) reference rate at that time, multiplied by the units of currency. If no RBI reference rate exists for the currency, the value is 1% of the gross rupee amount.¹
• Method 2, slab values (rule 32(2)(b)): at the bank's option, the value is deemed to be the slab amount below. A bank that opts for the slab method must use it for the whole financial year.¹

Kotak Mahindra Bank states that "GST at 18% will be applicable on the charges as determined as per above slabs".²

Note: The rule's text for the upper slabs reads as a fixed amount plus a percentage "of the gross amount of currency exchanged". Kotak Mahindra Bank's published slab table applies the percentage to the amount above ₹1,00,000 and ₹10,00,000 respectively, which is how banks commonly apply it.¹²

What happens if an exporter does not claim GST on currency conversion?

If an exporter does not claim GST on currency conversion, the GST becomes a cost of the export. On a ₹1,00,000 conversion under Kotak's published method, that is ₹180.²

• Unregistered exporters: pay the GST as a cost, with no credit available.²⁴
• Missing GSTIN: if the bank does not have your GSTIN on the account, the GST is not billed to your registration and is harder to claim.
• Other charges: other bank charges on the same remittance, such as a flat inward remittance fee, are separate services, so check the bank's schedule for how GST applies to each.

For the fees a gateway charges on the same receipt, see GST on payment gateway charges.

How is GST on a currency conversion calculated?

GST on a currency conversion is calculated by working out the rule 32(2) value and applying the bank's GST rate to that value.¹²

For example, with made-up rates: if the reference rate for the US dollar were ₹84.00 and the bank bought $1,000 from a consultant at ₹83.50, the value of the bank's service under the spread method would be ₹0.50 multiplied by 1,000, or ₹500, and GST would be charged on ₹500.¹

Using Kotak Mahindra Bank's published slab method and its 18% rate:²

Your own bank may use the spread method instead, or a different rate on its invoice. Read its schedule of charges and the GST shown on the inward remittance advice.

What are the common mistakes with GST on currency conversion?

The common mistakes with GST on currency conversion come from treating every conversion the same way.¹³⁵

• Assuming GST on the whole receipt: GST applies only to the rule 32(2) value of the conversion service.¹
• Confusing bank-to-bank trades with your conversion: entry 28 of Notification No. 9/2017-Integrated Tax (Rate) exempts "inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange or amongst banks and such dealers", which covers the bank's own market trades, not the conversion it does for you.³
• Assuming a foreign platform follows the same rule: if a payment platform converts your money outside India before sending rupees, the converting entity and its location decide the GST position. Section 13(8)(a) of the IGST Act places services by a banking company, financial institution or non-banking financial company to account holders at the location of the supplier, but those terms are defined by reference to the RBI Act, and a foreign platform may not fit them.⁵ Treat this as unsettled and ask a chartered accountant.
• Missing a markup in the rate: where the cost of conversion is in the rate rather than a separate fee, the spread method in rule 32(2)(a) measures it against the reference rate.¹ See FX markup on export payments.

Reconcile the bank's GST line every month so the credit is not missed.