cross currency swap & income tax implication

XYZ is an Indian Company. It takes a loan in EURO from one of its group company in Germany. It enters into a cross currency swap for the loan with an Indian bank to eliminate its foreign exchange exposure.

We understand that in some countries, gains and losses on cross currency swap are taxed as they arise. But gains or losses on foreign denominated loan are taxed only when the loan are repaid (i.e. when the gain or loss is realised). 

Can any one comment what is the tax position in India for this hedging arrangement?

Replies (1)

upto what i am able to understand your querry , is that what shall be the treatment of  permium paid for hedging against the currency fluctuation ,

If matching concept is followed thepremium paid has to  be divided  by the tenure of the loan  and expenses can be claimed

 

if conservative approach is followed  then whatever the premium paid be debited toprofit &loss a/c

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
ARTICLESHIP 25 August 2026
CA Article's

Saini Pati Shah & Co LLP

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 10 August 2026
Article Assistant

Suraj Garg and Associates

New Delhi

CA Inter

View Details
Company
29 August 2026
Chartered Accountant

Velionit Consulting PVT LTd

Mumbai

CA

View Details
Company
27 August 2026
ACCOUNTANT

CHARUPREETI & CO

Noida

Graduate (Any)

View Details
Company
14 August 2026
Semi Qualified

Goyanka & Associates

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 17 August 2026
Article Assistant

K R Kiran Kumar & Associates

Bengaluru

CA Inter

View Details
Company
07 August 2026
Chartered Accountant

Devesh Garg and co

New Delhi

CA

View Details
Company
11 August 2026
Manager / Senior Manager - Statutory Audit

CommerceCareer

New Delhi

CA

View Details