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Accounting entry for forex transaction

ANIL (Others) (198 Points)

01 August 2019

Hi Experts,

Our bank have charged CGST and SGST on export payment realised in foreign exchange.

The bank have not charged any bank charges but CGST and SGST only, as under :

Taxable value on conversation of forex Rs 6534.17, CGST Rs 588.08 and SGST Rs 588.08.

Bank have debited only GST and not taxable value.

How to pass this entry in Tally please ?

Thanks

Anil

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7 Replies

Durgesh Mourya (219 Points)
Replied 04 August 2019

If the Payment is directly received in Bank from Foreign. No other Party involved [except RBI]. Then their Charges are Correct, but they can take GST on their services.

For Entry purpose, you just give Bank Charges.

ITC applicable.

NOTE: THERE ARE MANY IRREGULARITY IN AUTHORITIES & ENTITIES. WHAT TO DO, EVEN BANKS ARE SOME TIME DID WRONG CALCULATIONS.

Sanjeev Kumar (Company Secretary) (77 Points)
Replied 01 May 2020

@ anil

How you have deal with the situation

Kindly share your experience

ANIL (Others) (198 Points)
Replied 01 May 2020

In purchase entry, we show taxable value and after this we reverse taxable entry by journal.

Aman Goyal (Finance Manager) (2 Points)
Replied 29 August 2020

the taxable value as stated by you is Rs 6534.17, that means the amount of foreign currency converted in INR is Rs 2034170/-,

the bank charges of Rs 6534.17 has been included in the amount of conversion as it is a consolidated amount being deducted from your bank account, it does not show up separately in the payment advice received from the bank.

so the correct entry would be as follows

advance to supplier DR. 2027636 (2034170 - 6534)

to bank 2027636

(Being advance for import to supplier)

Bank charges Dr 6534

CGST 588

Sgst 588

to Bank 7710

(Being Bank Charges on foreign currency conversion and GST)