Direct answer: CGST Rule 34 uses different foreign-currency conversion rules for taxable goods and taxable services. Goods use the applicable CBIC rate notified under Customs Act section 14 for their time-of-supply date. Services use the applicable rate determined under generally accepted accounting principles for their time-of-supply date. An invoice currency, a customer’s payment rate or one universal ERP exchange-rate table cannot replace those separate tests.
Checked on 23 October 2026 against CBIC’s Rule 34 repository and the actual Rule 34 text in the official CGST Rules compilation. The compilation records the substitution effective 27 July 2017 through Notification 17/2017–Central Tax. Its historical pre-substitution RBI-reference-rate wording must not be applied to a current supply. The historical compilation is used for this rule, not as a statement that every other GST rule remains unchanged since 2017.
Classify the supply before selecting a rate
The first working-paper question is whether the supply being valued is goods or services. A foreign-currency contract does not answer it. For goods, retain the applicable section 14 notification, currency, effective date and quoting unit. For services, document the GAAP basis and the relevant dated rate. A customs rate used operationally by the accounts team is not automatically a GAAP-supported service rate.
| Question | Goods | Services |
|---|---|---|
| Rule 34 branch | Sub-rule (1) | Sub-rule (2) |
| Rate basis | Applicable CBIC notification under Customs Act section 14 | Applicable rate determined under GAAP |
| Relevant date | Time of supply under section 12 | Time of supply under section 13 |
Determine the relevant date independently
Establish time of supply under the applicable statutory and notification framework before converting. The invoice date is not a universal answer, especially for advances, reverse-charge supplies, continuous supplies and delayed invoices. This article’s calculations expressly stipulate the legally determined time of supply; they do not decide those separate timing questions. Preserve the timing conclusion beside the selected rate so a later reviewer can reproduce the INR value.
When rates change between the relevant date and the bank settlement date, keep two reconciliations: the Rule 34 valuation and the accounting settlement difference. With unchanged consideration and no other adjustment event, a later exchange movement alone is not a reason to rerun the original valuation at the collection-day rate. A genuine price change, credit note or debit note needs its own statutory analysis rather than being hidden in an exchange-rate correction.
Respect units, components and the boundary with import taxation
Read whether a rate is quoted per one foreign-currency unit or per a stated block of units. Multiply the amount by the per-unit INR equivalent, retaining sufficient precision before applying the legally required reporting rounding. If separate independent goods and services supplies appear on one commercial document, each needs its proper branch. If the arrangement is legally a composite or mixed supply, first resolve that classification; a preparer cannot split it merely to obtain a preferred exchange rate.
This is a Rule 34 valuation control for supplies within its scope. It does not replace customs assessable-value rules or the import-IGST computation on a bill of entry. Nor does currency conversion itself establish export status, exemption, zero rating, place of supply, a tax rate or entitlement to a refund. Those conclusions need their own evidence. All rates in the following examples are hypothetical assumed applicable rates, not actual notifications, historical market quotes or suggested current exchange rates. The illustrations calculate taxable value only, excluding GST and cess.
Errors worth detecting before the return is filed
A common control failure is selecting the freshest exchange rate rather than the legally relevant one. Others include using the bank’s net realisation as gross consideration, treating a per-hundred quote as per-one, mixing currencies before conversion and replacing a supported GAAP service rate with a customs goods rate. Reconcile foreign-currency quantity, value, conversion basis and INR output separately. This makes errors visible even when the total debit and credit entries balance.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: Goods at the notified date’s assumed rate
A taxable goods supply is USD 10,000. Assume the legally applicable section 14 rate at its time of supply is ₹84.20 per USD. Rule 34 value is 10,000 × 84.20 = ₹8,42,000. A bank quote of ₹83.70 would give ₹8,37,000, understating value by ₹5,000.
Illustrative example 2: Services use their GAAP-supported rate
A taxable service fee is USD 10,000. The documented applicable GAAP rate at time of supply is assumed to be ₹83.80. Value is ₹8,38,000. Substituting an assumed customs goods rate of ₹84.20 would give ₹8,42,000, an overstatement of ₹4,000.
Illustrative example 3: One quote represents one hundred yen
A taxable goods supply is JPY 20,00,000. Assume the applicable notified quote is ₹56.40 per 100 JPY. The per-yen rate is ₹0.564; INR value is 20,00,000 ÷ 100 × 56.40 = ₹11,28,000. Multiplying directly by 56.40 would give ₹11,28,00,000, a hundredfold result.
Illustrative example 4: Later collection is a separate reconciliation
A USD 5,000 service is valued at the assumed applicable GAAP rate ₹84.00: ₹4,20,000. Collection later converts at ₹85.20, giving ₹4,26,000 before any bank charges. The ₹6,000 difference is a settlement bridge, not an automatic increase in the original Rule 34 value. Consideration and the time-of-supply conclusion are unchanged.
Illustrative example 5: Two legally separate supplies
Assume a contract document contains independent taxable supplies: USD 4,000 goods and USD 2,000 services, not a composite or mixed supply. Applicable hypothetical rates are ₹84.25 for goods and ₹83.90 under GAAP for services. Values are ₹3,37,000 and ₹1,67,800, totalling ₹5,04,800. Using 84.25 for both would produce ₹5,05,500, ₹700 too high.
Illustrative example 6: Convert each currency before aggregation
Independent taxable service fees are EUR 3,000 and GBP 2,000. Applicable GAAP rates are assumed to be ₹91.40 per EUR and ₹106.25 per GBP. Values are ₹2,74,200 and ₹2,12,500: total ₹4,86,700. The foreign amounts cannot be added as 5,000 units and multiplied by one currency’s rate.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Establish the supply’s actual classification | Goods/services conclusion and composite-supply review |
| 2 | Confirm Rule 34 is the valuation provision in point | Separate import-customs or other valuation analysis where needed |
| 3 | Determine time of supply under the correct framework | Dated timing memo and transaction documents |
| 4 | Select the goods notification where applicable | Section 14 notification and effective-date evidence |
| 5 | Support the services rate under GAAP | Accounting basis and dated rate evidence |
| 6 | Read currency and quotation units | Per-one or per-block unit conversion |
| 7 | Reconcile gross foreign-currency consideration | Contract, invoice and adjustment schedule |
| 8 | Recompute INR values at full working precision | Independent multiplication and aggregation |
| 9 | Separate later settlement differences | Bank receipt bridge and charge classification |
| 10 | Reconcile final values to GST reporting | INR taxable-value schedule and correction trail |
Sixteen practitioner FAQs
1. Is one RBI reference rate sufficient for all supplies?
No. The current Rule 34 branches distinguish notified Customs Act rates for goods from GAAP-determined rates for services.
2. Can goods use the rate actually realised from the bank?
Use the applicable notified rate for the relevant time-of-supply date. A bank realisation rate is not a substitute simply because it reflects cash received.
3. Must services always use a customs notification?
No. Sub-rule (2) requires the applicable GAAP-determined rate for the relevant date.
4. Is invoice date always the relevant date?
No. First determine time of supply under the applicable section and framework; only then select the dated rate.
5. Are the illustration rates current official rates?
No. They are explicitly hypothetical inputs used to demonstrate arithmetic. Retain the real dated notification or GAAP evidence for an actual transaction.
6. How should a per-100-currency-unit quote be used?
Divide the foreign amount by 100 before multiplying by that quote, or derive the equivalent per-unit rate. Retain the original quotation unit.
7. Does later rupee appreciation require an automatic credit note?
A currency movement alone, with unchanged consideration and no separate adjustment event, does not automatically revalue the original supply. Analyse genuine commercial adjustments separately.
8. Can net bank receipts stand in for invoice consideration?
No. Reconcile gross consideration, conversion and bank deductions separately; net realisation may conceal both fees and exchange differences.
9. Can different currencies be added first?
No. Convert each amount using its own currency and applicable rate, then aggregate the INR values.
10. Can goods and services on one invoice use different rates?
For genuinely separate supplies, apply the appropriate branch to each. Resolve composite or mixed supply classification before deciding to split values.
11. Does Rule 34 decide whether a service is an export?
No. Export conditions, place of supply and zero-rating rules are separate legal tests.
12. Does this replace import-IGST valuation on a bill of entry?
No. Customs valuation and import-IGST provisions have their own computation framework.
13. May the ERP choose the latest rate automatically?
Only if the resulting rate also satisfies the legal basis and relevant date. Retain an override or review process for incorrect automated selections.
14. Where should rounding occur?
Keep adequate working precision during conversion. Apply the actual statutory and reporting rounding requirements at the appropriate stage, recording any reconciliation difference.
15. Is a subsequent price reduction merely an exchange difference?
No. Establish whether consideration actually changed and apply the relevant credit/debit-note and valuation provisions. Do not bury a price change inside an FX account.
16. What should the review file contain?
The classification, timing conclusion, foreign amount, rate basis, dated evidence, quotation unit, calculation and return reconciliation should be reproducible together.
Working-paper organisation
Keep the source documents, calculation and final conclusion together for the same entity and period. If using assureTax or other assureOffice tools, use only confirmed available functions and retain this evidence with the output.
Conclusion
Make classification, date and quotation unit visible before the multiplication. Keep a separate settlement bridge so accounting exchange movements do not silently change GST valuation.