Value of imported goods - either customs rate or rbi rate

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 March 2018 Dear Experts,

Please guide, how to determine the value of imported goods in the following case:

01/03/2018 - Advance payment done - USD 1000 - Exchange Rate @ Rs.65/- - Value Rs.65000/-
07/03/2018 - Goods imported - Customs rate - Rs.64/- - Value Rs.64000/-

How to account the same in books? What is value of goods imported either Rs.65000/- or Rs.64000/-.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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07 March 2018 Purchase should be accounted at the exchange rate of RBI prevailing on the bill
of entry date.

Querist : Anonymous

Querist : Anonymous (Querist)

07 March 2018 Thanks for the reply.

That means to say, Value as per Bill of entry should be taken as value of goods imported for recording purpose.
Also tell me if it optional or mandatory - any reference?

Someone argued that we need to take payment rate for value.

Please explain with reference.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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02 August 2025 Great question! Here’s a clear explanation about **valuation of imported goods in accounting** when exchange rates differ at payment and customs clearance dates:

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### 1. **Basic principle for valuation of imported goods**

* As per **Accounting Standards (AS-11 on Foreign Exchange Transactions)** and general accounting practice, imported goods should be recorded at the **exchange rate prevailing on the date of recognition of the liability or receipt of goods**.

* In case of imports, the **customs valuation and the bill of entry date exchange rate** are normally considered for accounting the value of the goods.

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### 2. **Which rate to use?**

* **Exchange rate on advance payment date** (Rs.65 per USD in your example) — relevant for recording the advance payment (i.e., a foreign currency asset or advance to supplier).

* **Exchange rate on customs bill of entry date** (Rs.64 per USD in your example) — relevant for recording the actual purchase (imported goods value) and liability to customs.

* **Therefore:**

* Record **advance paid** at Rs. 65,000 (USD 1,000 x Rs. 65)
* Record **imported goods inventory / purchase** at Rs. 64,000 (USD 1,000 x Rs. 64)
* Adjust the difference (Rs. 1,000) as a **foreign exchange gain or loss** in the Profit & Loss account, or adjust it against the customs duty or other import-related costs as per accounting policy.

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### 3. **References / mandatory guidelines**

* **AS 11 (Accounting for Foreign Exchange Transactions)**:
Requires recognition of foreign exchange differences at the date of transaction or settlement.

* **Income Tax / Customs Valuation Rules:**
Customs authorities value goods based on the exchange rate on the date of the bill of entry or customs clearance.

* **RBI and Accounting Standards**:
RBI’s reference rate is generally for payments and conversions, but for **accounting imported goods**, the **rate on the bill of entry date** (customs exchange rate) is the accepted standard.

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### 4. **Practical implication**

* **Advance payment and import goods value are recorded separately** at their respective rates.

* **Foreign exchange differences arising due to rate variation between payment and import date must be accounted separately** as gain or loss.

* You **cannot choose arbitrarily** to record at advance rate or customs rate for the whole transaction; it must reflect reality and comply with accounting standards.

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### **Summary Table**

| Transaction | Rate to Use | Amount (USD 1,000) | Accounting Treatment |
| ---------------------------- | --------------------- | ------------------ | ------------------------------------------------ |
| Advance payment (01/03/2018) | Rs. 65 | Rs. 65,000 | Record advance payment at Rs. 65,000 |
| Goods imported (07/03/2018) | Rs. 64 (Customs rate) | Rs. 64,000 | Record purchase/inventory at Rs. 64,000 |
| Exchange difference | Rs. 1 (65 - 64) | Rs. 1,000 (loss) | Record forex loss or adjust in customs/duty cost |

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### If you want, I can help you draft the journal entries for this transaction. Would you like that?

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