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For claiming exemption under Service Tax (export) we need a FIRC.
FIRC is a proof that the earning was in foreing currency.
Now, the bank does not provide the FIRC since they receive the funds in INR from either Western Union (Elance) or ODesk (Upwork) via NEFT. Therefore, the bank says, since they are not the ones involved in conversion from USD to INR, they cannot provide FIRC.
How to obtain this document then?
If you or someone in the community has found an effective solution, please be kind to share and oblige.
as per GST law and save 18% tax we need this document (FIRC) to proof that payment came from abroad and what paid in foreign currency. hence it will qualify for export of service and payments from upwork will qualify for exempt from tax.
Has any body found a solution. Also does any one knows which bank is used by Upwork to transfer money to India.
Hi Angad, I have been seeing that started the thread and have a quite of lot of discussion with the Upwork Team. Are you able to find any solution around it?
FIRC for LFT.
I am withdrawing funds either using paypal or Wiretransfer. They both cost more when compared to LFT but to get an FIRC these are the only options.
If you are withdrawing using paypal here is the procedure
If its a wire transfer you can easily get an FIRC from your bank to which the amount has been credited. Just contact the bank once you get the funds and they will give it. Some private banks automically mail the FIRC to us once the amount is received. They call it Inward Remittence and they said this can be used as proof that we received amount in foreign currency.
As per my current understanding, in case of "Local Fund Transfer" mode of payment, the invoice amount is first converted into INR from upwork partner bank in US (Wells Fargo) and then transferred into Indian Bank (Standard Chartard Bank), which in-turn credit the amount into your bank via a NEFT transfer.
Now since the money in SCB is received in INR denomination, they would not be in a position to issue you a FIRC certificate.
The implicaiton of this would be that your invoices will not be considered as export of services and you shall be liable to pay 18% GST on your receipts.
Please note in case if you have received money by a wire transfer or in case if SCB has received your money in foreign currecny and then converted it into INR, they are legally liabile to provide you a FIRC certificate.
You need to check in your mode of payment how SCB has received the funds and proceed accordingly.
Hope my answer was helpful!
If you have opted for "LFT" in payment mode, then it's most likely that SCB is receiving funds in INR and will not be providing you with an FIRC.
You can refer this comment from Upwork's team member. Hope this will clear!
You are really helpful in answering queries to people about GST and FIRC. In my case, I have used LFT method before me registering my company for GST. After registering for GST, I'm withdrwaing my funds using wire transfer.
However, during the period of Feb 2016 to June 2017 I have used LFT for fund transfer. It is necessary to get FIRC for LFT transactions during this period? However, I have received payment receipts from Upwork for these LFT transactions.
I have a similar issue. Received a notice from Service Tax department about the LFT transfers between Arp-2016 and Jun-2017.
Were you able to get the FIRC for LFT mode?
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Mukesh, how did you resolved the issue? Did you pay fine?? Or were you able to get FIRC?? I am also withdrawing using LFT and might end up in the same situation so really worried