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Money received via paypal

Tax queries 599 views 1 replies

sharpvision

43 Points Posted on 26 June 2012

Dear All!

Please help me!

Transaction: Sent PayPal invoice to client 30th March, 2012. Client paid the invoice in full on 30th March, 2012 ( Same date ). Money transferred to Bank account in India on 30th March, 2012 (Same Date ). But, PayPal sent the money on 4th April, 2012.

Questions:

1. For the above transation will the tax be paid in FY 2011-12 OR FY 2012-13?

2. PayPal's currency conversion rates are always less than RBI's reference rates. So,

A. Can I make entries with PayPal currency conversion rates?

B. Will I have to use RBI's reference rates for that day? If yes, then can I show money loss in currency conversion in indirect expenses?

Please help!

Replies (1)

Prateek Agarwal

Sr. Executive - Finance & Accounts

1732 Points Posted on 26 June 2012

It depends upon the method of accounting you are following. If it is a mercantile basis, then the income is of FY 2011-12.

You have to use the RBI reference rates only. Then, book the loss in your accounts in the FY 2011-12. Again, it is possible if you are following mercantile basis of accounting.

In case of cash basis i.e. receipt basis, then same procedure would apply for FY 2012-13.

Prateek