Dear Experts,
X Pvt Ltd, Export company, raising Invoice under Terms as CIF
Kindly clarify whether invoice should be shown as Cost, Freight & Insurance Separately.
Also we would like to know whether cost price alone should in GSTR-1 While filing GST or Should be included in Freight & Insurance as Sales Value.
Thanks & Regards
Fareed
| Here is the accounting treatment for FOB (Free On Board) export sales: 1. FOB Meaning: Under FOB terms, the seller's obligation ends when goods are loaded onto the vessel at the named port. Risk transfers to the buyer at this point. Revenue is recognized when goods are loaded (risk and reward transferred). 2. Accounting Entries: On Shipment/Loading (Revenue Recognition): Dr. Debtor (Foreign Currency) A/c [at bill exchange rate or RBI rate on shipment date] Cr. Export Sales A/c [INR equivalent] On Receipt of Payment: Dr. Bank A/c [at actual exchange rate on receipt date] Dr./Cr. Forex Gain/Loss A/c [exchange difference] Cr. Debtor A/c [at original INR amount] 3. GST Treatment: Export of goods is zero-rated under IGST Act. Under LUT: No IGST on invoice — but show taxable value in GSTR-1 under zero-rated supply. Shipping bill is the key document for zero-rated status. 4. Customs/DGFT: Export value in shipping bill should match invoice value (FOB). Declare correctly in shipping bill for FEMA repatriation tracking. 5. Ind AS/AS Treatment: Under AS 9 / Ind AS 115, revenue from export is recognized when control/risk passes to buyer — for FOB, this is at the port of shipment (loading). 6. FEMA Compliance: Export realization must happen within 9 months from shipment date (for most goods) — file eBRC (Electronic Bank Realization Certificate) on realization. |
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